The meagre 500GB hard drive shipped with the iMac was almost full due to Virtualbox guest VMs. I quadrupled the capacity with the 2TB WD Caviar Black!
The install was mostly straightforward though I did hit a snag with the hard drive fan spinning constantly after the swap. All it took was a flip of the temperature sensor connector and voila! Problem solved!
Don't replace all the screws or completely put the iMac together until you test it to make sure it's working. An extra pair of hands also makes it easier. Read the comments in the guide - they can provide helpful info.