How do I use my iMac as a "monitor" for my Xbox 360 and my Wii?

There's no good way to do this. iMacs do not have any sort of Video Input. While you could use an external Video In adapter that connects to Firewire or USB, such as ElGato's EyeTV, the latency introduced makes these devices singularly unsuited for any sort of gameplay.

If you don't have to upgrade to a new iMac, another option would be to buy a Mac Mini. You can use most any monitor you want with it, so that gives you many more options. If you buy a monitor that has both HDMI and DVI, you can use DVI for the Mac Mini (the Mac Mini ships with a HDMI->DVI adapter IIRC) and HDMI for your Xbox 360 for example. If the monitor also supports VGA, you could use that for your Wii.

This is the setup I use for my Xbox 360, and it works quite well. I have a Dell 22" monitor and it works great for this.