Yes, garageband is included, the only other tools I use are an oxygen8, a 1/4" -> 1/8" adaptor.
Yes, the current crop of iBooks are pretty powerful, and loaded up with RAM they should be able to run GB sufficiently there are a couple of factors to consider here. 1) new powerbooks are going to be announced in january, this will lower the price of current powerbooks(I'll even be selling mine if you're interested) 2) a new version of garageband is expected to be released in january as well, it will feature 2 track simultaneous recording as well as, hopefully, improved performance, particularly on older machines.
I haven't actually used the new iBooks for GB, but considering they are roughly the same speed as my powerbook, only with slightly slower RAM and system bus, they should still be able to hold up just fine, especially if you maxed out the RAM