Replacing HDD on 2007 17" iMac
As seen in Apple Discussions your iMac has the SATA2 controller.

Also there are no limitations from the controller for the cache size of the HDD. 

So you may easily go for an 7200 SATA2 16MB/32MB cache

note: The last 17" iMac, was the late 2006 model which I assume thats what you have :)

edit: Even if your iMac is SATA 1, it wont have any compatibility problems. It will just perform as much as it can (1.5Gbps/s)

last edit: If you use this tool you can see successful user upgrades and benchmarks of various hard drives.