The x1600 isn't top of the line by any means.
That having been said, it's a capable card that can run most current games at good frame rates. The only games I play semi-regularly are Call of Duty 2 and Tiger Woods 2007 (on Windows via Bootcamp). Both games run very nicely on my CD iMac (same specs as yours, but CD not C2D).
For photography work, the chip will be fine. I notice you have the 256MB VRAM, which is nice if you want to add a second display (128MB/display, rather than 64MB/display). But either way, you shouldn't have any issues with the X1600.