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The way I look at it, yes it's performance related, but more importantly for a laptop, it's battery life related. On the fly graphics switching refers to being able to switch from the more power hungry video card to the power saving onboard low end graphics card without interrupting what you are doing.
Do the 21" iMacs have the yellow screen band problems?
Not that i know. And none of the 27s we've had thru the shop have the issue either (some 50+). Working on the 27 is a real joy. I lust after a quad core with a dual core as a 2nd monitor (and NAS, and another processor on the network i can access using Apple Remote Desktop -- a good place to run VMWare Fusion)dave