The 10GB model is discontinued,the new entry level iPod is the 15GB model which lacks some of the accessories that the 20GB and 40GB come with. Such as the dock, remote, and the carrying case. The main difference between the two larger ones is the number of songs they can hold. Also, The 40GB is slightly thicker than the other two.
The 40GB model is the best deal:
15GB = $19.93USD Per GB
20GB = $19.95USD Per GB
40GB = $12.48USD Per GB
Any of the iPod models should work just fine with your iMac, the main requirement is built in firewire, which you have. Of course more memory is always better, but that shouldn't have much of an effect when using an iPod.
I have an "old" third gen 30 GB model and love it
