Mac Mini 2009 model 3.1 - what upgrades ?

I have a late 2009 Mac Mini 3.1 in original basic spec 2gb memory and 160gb HD. It's been upgraded to OS 10.7.5. It is used as basic desktop machine connected to TV for online streaming / web browsing / email / word processing and music / photo storage and is host machine for iPad and iPhone. Apple spec page below

http://support.apple.com/kb/SP577?viewlocale=en_US

It's currently creaking with nearly full disk (130 of 160) and frequent spinning disk delays.

How much memory can I put I it, device says 4gb max but I see references here about 8gb upgrades to 2009 mac minis ?

What is best option for HD ? Going for say 500gb internal or an external device with iTunes library and photos on external drive - appreciate that's slower but not having to setup new bootable disk may be an advantage. When upgrading HD what's easiest and most cost effective way to copying across OS and files. I have a "free agent" 640gb drive currently being used as a time machine backup and movie storage, can I copy hd to that before booting new drive or will I need an external dock to prepare the new hd to be bootable ?

Should I consider an SSD ? Quite a bit more expensive and my machine has old/slow processor

I plan to upgrade machine to new mac mini at some stage likely in 2014 to wait for new chip so upgrades to 2009 machine should take this into account.

Thanks in advance, I've been through older threads which have been useful.

Thanks to all.

I have found the right memory kit 2x4GB CORSAIR and the WD 750gb drive on an online seller in France where I am located currently.

@philipma1957 do you mean full kit to include a USB external housing so that you can copy over the HD prior to installation ? I cannot PM you as I am a forum newbee, my email is in my profile, if you'd be so kind as to send over a little "how to"

@geeji - thanks, I do have the firmware upgrade and thanks for the other links and advice

Update:

Memory in and working, excellent.

Harddrive issue - on start up shows a folder with a blinking question mark. Do I just re-open the Mini and ensure it's connected properly, what to look for ?

Does the new drive have to have a specific name, like Macintosh HD as per original (possibly a daft question) ?

I formatted the new drive and made a bootable clone with SuperDuper, I checked a boot when connected externally, all good. Put new drive in but have the problem above. I have been able to boot machine via original drive connected externally, the new drive was "unreadable"


EDIT: I have checked with Disk Utility and it can identify the disk (ie it knows capacity, type etc) but it says the file system is unrecognisable

Thanks @Omnius and @Phillipma - will try that

EDIT Update: Many thanks all working now.