If your wife does nothing but what you mentioned above, then the Mac mini will be perfect for her. I've switched 6 or so people now and most of them just want to do the simple day to day tasks as mentioned above. Macs in general are perfect for thses situations. They're a great secure, solid platform that will run without hassle for years.
As for the two models you mentioned above, I'de splurge a little and get the more expensive one. You get a bit more for your money and the 512 MB of ram will help with Tiger. Plus, it has Airport built in. You can't go wrong.
Have you checked out the cheapest iMac G5 at all? It's $1300, but it's a nice package.