I haven't tried ICS with the Wireless, but there is an option for it, so I presume it would work fine. And Wireless networking is a total dodle connecting to a router or whatever, no different to a PC. The signal is pretty good, it's fine upstairs when the router is downstairs etc. At the moment I have the max amount of signal. All good :P
The screen is 12" but the resolution is 1024x768, which is the same as most 15" PC screens and the same as the 14" iBook. To be honest, the bigger iBook isn't really worth it, because it's not as compact, the screen is no better and it's noisier (apparently). It's just a tiny bit faster, but it's loads more expensive.
And it's plenty powerful enough for a bit of potatoshop. Not tried editting anything, but I'm sure it would manage just fine :)