I have a 400MHz iMac (in Indigo) and run OS 9.1 on it. Of course, I don't do any web surfing on it, and am content to use it with iMovie 2 (got it mainly to do smaller video jobs and maybe down the line some word processing). Plus, I value performance over compatibility sometimes with old machines--it's why I run 9.1 on my iBook and System 6 on my maxed-out Classic (and Snow Leopard over regular Leopard on my MacBook--even if I did lose floppy drive support, which matters only to us in the .001% of the Mac population that needs them to move files to and from vintage Macs).

I think as more and more of the iMac G3s become recognized as vintage/hobby computers and the mainstream web passes up their capabilities, the debate over running 9 or X will become a question of either performance/compatibility or nostalgia, much like System 6/System 7 is with our 680x0s.