The answer is yes.
To develop iPhone applications, you need the iPhone SDK, which in turn requires Mac OS X version 10.5 (Intel). If you can satisfy this requirement in your OS X installation, then you can build iPhone apps. Whether you can test them just as easily depends on USB support in your installation.
The fact that the Mac Mini is $599 is irrelevant to the question and how inexpensive it is, is relative. What is inexpensive to one may not be to another (especially since the OP states that he is not in US, where it might be much more than $599).
