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I used my Mac mini for a fair bit of software development (C#/mono and ObjectiveC/Cocoa) and it wasn't a problem with regards to speed. It does have 1GB of memory though, with the 256MB it came with even Finder + a couple of Firefox windows made things too slow for my liking.

Don't let the real Mac fanatics hear you say that. When the Mac mini came out there was huge arguments over the amount of memory bundled with the mini and they kept arguing that 256MB is plenty. The new revision mini comes with 512MB and 2x VRAM.