I3 or i5?

I have been using a 2007 white intel based iMac (right before the aluminum body). I have started having some serious graphics issues (flickering, screen freezes, left over graphics when moving a window etc.) Now im getting complete lock ups and screen freezes and pretty much have to power down the Mac and power back up in order to fix it. Some say my graphics card might be the issue and that it's not repairable or replaceable. Is this true?
If so, I am thinking about purchasing a new model 27inch i3 $1699.
I don't use this machine for gaming, heavy video editing or anything like that. I do a lot of web design and use combos of dreameaver, Photoshop, iWeb, iPhoto, iMovie. I also run browsers and iTunes during this use. I never had any issues before in 3 years so im assuming that the i3 model should be sufficient correct? What's the major difference between the i3 and i5? Would I even notice a difference if I'm not doing intensive 3D editing, or major video editing or gaming? I just want to be sure I'm getting the right set up. Thanks!

For most computer buyers, there is no need to differentiate between Intel or AMD.  They are both bery good processors, and both will fill the needs of the vast majority of computer users out there. 
That being said, for the duties that the OP listed, there will be no discernible difference between an i3 or an i5.  For schoolwork, word processing, and watching movies, they will perform the same.  The difference in price can be used toward the software that will be needed, a carrying case, or some other accessory.
Since the OP is not a hardcore gamer, or someone who will spend a lot of time encoding video, there is no need for the most powerful processor available. 
For the average user, the latest and greatest is not needed.  Even the "latest and greatest" will be outdated in three years, so the old wives tale about buying top of the line to "futue proof" is just that...an old wives tale. 
My best advice: find a computer in your price range that has 4 or more GB of RAM, a decent fairly recent processor (Intel or AMD, either will do fine), and has a screen that meets your needs and a keyboard that feels comfortable for your hands.  Any laptop released in the last few months will do.  You do not need the absolute fastest processor, do not need tons of RAM, although you should get as much as you can afford.  You do not need the biggest hard drive on the block; external storage is very cheap these days. 
Once you have one that fits your needs, suits your own individual ergonomics....fire it up and enjoy!
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