I just got a 12" iBook a few weeks ago and it's my first Mac. I'm using it day-in and day-out as my main PC. At home, I have it hooked up to a 19" CRT and an external keyboard and mouse. I maxed out the RAM at 1.5GB.
It's certainly not a speed demon... it's about as fast as my 5 year-old Athlon 1.33ghz Windows PC. Using it as a laptop, it's plenty fast. When it's hooked up to the external monitor with screen spanning, though, it's noticeably slower. I attribute this to only 16mb of VRAM on each screen. It's not like it's unusuable or anything... far from it. But little things like scrolling complex web pages or resizing windows is more sluggish. I still don't think it would have been worth it to get the 12" PB, but I'm not sure. I love the computer, though, overall.