CPU speed and RAM, they really go hand in hand with video editing.
- CPU speed doesn't help if you do not have sufficient RAM cover all of needed video/audio/effect editing and rendering processes.
- Slower CPU with more RAM means that processes get covered by the additional RAM, but will take longer to render and preview during editing
So when choosing CPU and RAM, do not sacrifice one for the other.
My advice would be to purchase the computer with the faster CPU and then upgrade the RAM later when you have the money; from crucial.com or macsales.com (cheaper RAM, same quality). Honestly, 16GB of RAM is well worth the price, and so is the faster CPU; especially if you're working with HD video.
However, one thing to think about is that the newest 21.5" iMac is not user upgradable, only the 27" is. So you will not be able to upgrade the RAM on the 21.5", if you were to purchase that computer.
For serious HD video editing you will need the fastest i7 CPU available in the 21.5 inch screen model as well as the full 16 GBs of RAM.
You can't upgrade the RAM later in the 21 inch screen models, so you really need to get the 16 GBs of RAM up front as you won't be able to upgrade the RAM later, ever!
Also, budget for and purchase and register for 3-year extended AppleCare. You will need this!
You have all the first year to save to purchase the extended 3-year warranty. Do not forget about this!
Typically, with iMacs, hardware failures happen within the first five years of their operational life.