About 30-35% of Apple's customers buy desktops. The amount of that portion of users watching DVDs on their computers is probably very small because you can't really sit comfortably in front of a desktop computer. Optical drives can be noisy too, I'd rather not have drive noise interrupting a movie.
Needed Video RAM depends upon what you do with the machine and how your software uses it. lf the iMac is a long term investment though, I'd have to think long and hard about only 1GB of RAM in an iMac. The reality is every year more load is put on GPUs by the system and applications.