Doubling RAM really does cause a significant speed boost, but PPC chips are pretty much at the end of the line. Next version of OS X doesn't even support them. Also, the speed jump from a G4 to a Core Duo or Core 2 Duo will make your head spin. The G5 was competitive with x86 chips when it came out but the x86 chips got real fast real quick, and an Intel Macbook trounces even a G5 Power Mac.
So yeah, upgrade.
Buying a big external monitor to go with a souped-up Mac mini would be as or more expensive than an iMac.
My recommended setup is an iMac with the maximum possible amount of RAM and a cheap-o second monitor. Live it up with two monitors, I say.
You can sometimes buy cheap at
www.macofalltrades.com or similar places.
Did I mention max out the RAM? Do that. But buy the extra RAM from Crucial and save hundreds, and make sure that the RAM you get from Apple won't need to be thrown away (get the largest single chip you can). While you're at it, by the way, max out the RAM.