I recommend Purchasing their neewest model. Here is a link to that model.
My reason being is that if you get an older generation, you will only be that much more further behind. I myself would purchase the newer version just because the software is updated and is most likely to run faster for video editing. I too edit videos and the faster the compuer, the better. The one with the larger screen is found to be more convenient as more items are accessable and viewable. If you are tighter on money, do get the samller 21.5 inch, which is still fairly large. When it comes to video editing, you want to make sure you have the most space, possible to avoid future purchases of bulky external hard drives. If you choose the 21.5 inch, get the one with 29 GHz just to have more space. its only about a $200 difference. With the larger model, either amount of space should be sufficient. 3.2GHz is a bit much but if you are really serious, go for it. If you d need extra space and a faster computer, get the larger monitor with the maximum GHz. It will last you long and Apple never lets you down
In my experience with video editing, the computer hardware that most affects video editing is CPU "horsepower" or speed and memory.
If you get the current 21.5" iMac, you have to specify the quantity memory when you order it, as it's not user upgradeable (unless you want to mess with taking the front screen off the aluminum body). 27" model has user upgradeable memory. If you buy the 27" model, don't order memory from Apple as it's usually 2X what you can get quality memory for from vendors like Crucial, Samsung, and OWC, and it's not difficult to upgrade.
While alicia_muench likes large capacity internal hard drives, don't be afraid of an external hard drive for additional capacity. If you use a Backpack, you can store the drive behind your iMac, off the desk.
Photo editing requires less computing resources than video editing. So, if the system is spec'd to work well for video editing, it will be fine for photo editing. GIMP is very powerful, free, photo editing software that you might check out.