If you're using it with more than one computer, you're better off with an external drive. Internal drives are more useful if you're actually going to be USING the data on the hard drive. However, if you were to get an internal drive on the G5, you'd have to connect the iBook via Firewire target disk mode whenever you wanted to back up its hard drive.
I'd say get a hard drive that is big enough to hold complete backups of both drives, and then partition it so that one partition is the same size as the HD in the G5, and the other is the same size as the HD in the iBook. If the drive still has room left over, you can make a third partition for storing anything else you might want.
As for external hard drives, I'd suggest buying a case and a drive separately and putting them together yourself. The process takes two minutes and it'll save you a lot of money. Just go to NewEgg.com and look for an IDE hard drive and an external enclosure.