Due to the age and processor in the iMac, you are actually running the latest version of software for this unit.
Beyond that your options are limited but the biggest difference in performance could be gained by upgrading the memory. Officially this unit only supports 1GB, which you already have but in reality it supports 2GB. The memory installation in this unit is slightly odd, however. There is one user serviceable slot and one that is normally only accessible by professionals.
Given you currently have 1GB, you likely have 512MB in each slot. You can verify this by clicking "more info" on the About This mac screen and looking under "Memory".
Replacing the user-accessible 512MB with a 1GB module should give you marked improvement in how applications run, particularly when more than one are running at once.
The memory for this model is rather inexpensive and can be had for around $30 from reputable sellers. I would recommend Other World Computing. They are my "go to" place for misc upgrade parts when it comes to Apple computers.http://eshop.macsales.com/shop/apple/memory/iMac/G4_1.0GHz_1.25GHz
Installation is fairly easy as there is a removable plate on the very bottom of the iMac that, once removed, provides immediate access to the memory slot in the system.If you still have concerns, please do not negatively rate my answer, simply reply back before rating. I'll be more than happy to work with you further.
Hopefully, this info will answer your question. When you are satisfied, please give my answers a positive rating. You are judging my personal service only (not this website or your issue) and high ratings assure I remain in good standing.
Thanks and good luck,