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The performance hit with Photoshop will come from the Hard Drive.
Mac Mini's use a laptop drive, 4200-5400 RPM. Desktops use a 7200 rpm drive.
Photoshop makes big scratch files. Writing them to a slower drive will create a hit.
It's not that big a deal. It's like running it on a laptop, perfectly doable and certainly adequate for the average consumer.
There are 2 workarounds if you want, swap out for a Hitachi 7200 laptop drive or simply hang an external usb or firewire drive on it and set Photoshop to use that drive for scratch space.
For moderately heavy Photoshop that box should be fine, just add some RAM, you can never have enough and the stuff is cheap.
Be patient and shop the circulars. My deal of the week, Kingston 512mb pc2700 sodimm for one of my laptops, $70 final price.
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