I worked at a retail store and at the time, we got 25 iMacs in. Almost every single one of them came back. People just didn't know what to do with them.
I got one on discount, $699 I believe. Twice as much as the Celeron 300 eMachines that we had at the time.
It wasn't very fast. It didn't have any expandability. The screen was terrible. 14/15" and it had a horrible dot pitch. You could run 800x600 but it would give you a headache.
I returned it, and got the next hardware revision. It wasn't much better. It did, however, have a 6MB ATI video card in it so I could play some Quake.
The screen was so limiting when it came to real work. The keyboard was passable but the mouse was awful.
Later on, I stuck a pair of 128GB chips in it, and the biggest IDE HD I could find at the time (Maxtor 80GB?). It helped a little bit. But once I installed OS X, it was crippled. My friends PowerBook G3 Pismo was quite a bit faster but still too slow. It was a weird generation of Apple product where you got left behind almost as soon as it came out.
About 10 years later, in 2009, I got another iMac (the newest model at the time), and completely fell in love with it.