21.5" i7 vs 27" i5 -- which is more powerful?  What about video editing?

I'm trying to decide between a 21.5" iMac with 1TB and i7 and the next step up -- the 27" with an i5.
My budget really was only for the 21.5 -- which comes out at 1699 -- the 27 would be 1999 --
My main current needs are: Animation (Flash, etc), CS Suite (40 layer Photoshop), other programming (HTML, CSS, Canvas, etc), and music (8 analog in, effects, Logic).  I hope to start doing some HD video work (artistically) -- but due to focusing on music haven't really done much with it. 
The person I spoke to at the store said if I were going to do "serious" video editing (Avid) then the 27" with the 1GB of memory on the video card would be better -- for video editing that is.  He said that for everything else (CS Suite, etc -- and I believe he said Final Cut as well) the i7 with the 512MB video card would be better.
So -- here's the rub -- I'm on a limited budget and I think it might make more sense to put the extra 300 into RAM (they offered to bump the RAM to 12GB for $150 extra -- is that way too much?), or into an add'l monitor (I'm not taken with the glossy iMac screen as a main screen -- and that's also why the 27" screen wouldn't do much for me).  I do want to do some video production, but I don't plan on getting Avid or anything like that anytime in the foreseeable future -- I'd probably be doing 10 min video pieces and for what I currently need the computer for the i7 with more RAM is much better.  I just don't want to feel totally stupid down the road.
So:
21.5" iMac, 2.8 GHz i7, 1TB drive, 12GB RAM, Radeon 6750 with 512MB RAM
vs
27" iMac, 2.7 GHz i5, 1TB drive, 4 GB RAM, Radeon 6970 with 1GB RAM
Thanks

Similar question ... looking at nearly identical cost: 21" i7 2.8 vs. 27" i5 - both with the 512 6750 video card.  (I'll buy my RAM upgrade on-line - will take either one to 16GB.)
Both have same video memory.  I don't feel I need the bigger screen size if the processing power is a better value for video (can always add another, larger monitor).
This will be a video & audio editing computer.  I have a TON of old Hi8 home movies to move to digital for archive and eventual editing, will capture via firewire Digital 8 Handicam.
My main new video projects will be <10 min - primarily for web delivery.  Business sales/education and training.  Pretty sure I'll want to upgrade with FCPX.  I'm a believer in that you can always compress quality down, you can't enhance poor quality source up.
I have a background in video production (20 years ago), no expreience with NLE, but want to get back in.
I guess the i7 power will hold up longer and allow for growth of my abilities/uses of the software down the line ...
Maybe I've answered my own (& the OP's question) ...

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