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What are the major differences between the iMac G4 "Flat Panel" and the iMac G3 models?
The iMac G4 "Flat Panel" series is completely different from the earlier iMac models, so much so that the series -- officially dubbed just "iMac (Flat Panel)" by Apple -- could have easily been called the "iMac 2".

Photo Credit: Apple, Inc. (iMac G4 - Left, iMac G3 - Right)
Both the iMac G4 and iMac G3 use all-in-one designs, but the two are substantially different externally. The iMac G4 models use an attractive 10.6" half-sphere, ice white case with a chromed stainless steel neck that supports a 15 inch, 17 inch, or 20 inch TFT Active Matrix LCD display, whereas the earlier iMac models have 15 inch CRT displays in a variety of colorful all-in-one cases.
Internally, although there are significant differences between different iMac G3 models -- the line was sold for four years -- the iMac G4 models use a completely redesigned logicboard with significantly faster PowerPC G4 processors, faster graphics processors, faster RAM, larger hard drives, additional re-writable storage options such as the SuperDrive, and more.
Please refer to the "Comparison Q&As" from the iMac G4 Q&A and iMac G3 Q&A for a review of each line and the Ultimate Mac Comparison feature to compare the details of iMac G4 to any iMac G3 model.
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