Cheaper way to see performance increase:
Buy 4 gigs of RAM.
Install a newer HDD, buy a 250, 320, or 500 GB Western Digital Hard Drive.
WD2500BEVT, WD3200BEVT or WD5000BEVT.
Just go to newegg.com and search for that. it's the exact one you need.
The HDD should be $80 for the 500GB drive, maby 40-60 for the 250. I don't know it's been awhile for the 250, that's small so it shouldn't cost too much.
The more expensive way:
Buy 4 gigs of ram.
Buy an Intel SSD ($120, $240, and $430 for the 40GB, 80GB, and 160GB models.)
When you turn the computer on, it will be usable in 30 seconds, and you can open 20 applications in maby 2-4 seconds lol.
They are expensive, but fast. I don't think you really need it that fast, you just need the 'feel' of a newer computer. More specifically, a newer hard drive and more RAM. Going from 2-4 RAM is nice. 2 isn't really enough for me at all, and the smoothness of having 4GB is awesome.