a micro atx would be fine, im not sure about itx. I'm reusing her case which is a mid atx tower. I really like the motherboard that BigTroll had on pcpartpicker. It's fairly cheap with on board video.
The thing im not sure about an i5 is that if its needed. This won't be my computer, and my sister says she uses photoshop 5-10 a month, and spends the rest of her time on the internet, itunes, word processors, etc. Does this warrant purchasing an i5? also, 1st or 2nd generation cpu?
Currently there are no ivy bridge desktop duo cpu's available. Supposedly 3rd qtr.
The big advantage will be better integrated graphics.
I would not go with older socket 1156 chips.
I don't think the cpu, either i3 or i5 will be a big issue.
It is the ssd and ram that will really make the difference.