Does anybody know if this little guy has to be connected to record ( Can it operate and store information by itself ) or is it just a cheap I/O for mac users ?

it just a cheap I/O for mac users i.e. it is an A/D, D/A converter

speaking of the griffin imic...is there any special reason why my cubase sx won't recognise it as an input? or am i doing something wrong (how to set it up etc?) all it will recognise is my internal imac microphone!

Go to Audio Midi Settings in the Applications->utilities folder.

There you need to set the input device to iMic USB device for it to stop selecting your internal microphone...