Before upgrading to a newer OS, check that your computer meets the system requirements, and be proactive in upgrading the memory if need be. You have not posted the specs of your iBook, but I seem to recall needing a processor with 867 MHz or greater, a combo or SuperDrive, 512 MB RAM, ~9 GB of hard drive space.
Even if you meet these minimum requirements, you also need to consider what you'll be using the computer for. If you're planning on syncing with an iPad, iPod touch or iPhone, you'll probably want iTunes 10.6.3 which will only run on Mac OS X 10.5 and later. Most newer software, in addition to needing 10.5 or later, may also require an Intel processor which you can't upgrade to without purchasing a newer system.
Ultimately the decision comes down to weighing being able to use the system for another year or so before it becomes completely unsupported by Apple, or biting the bullet and upgrading to a newer system that will last longer into the future and will likely be easier to maintain and still get help on.