iMac 2008 HDD upgrade - Will this be ok?

The size is fine, but your machine won't get any benefit by using a SATA III drive, it's too old. Your machine only recognizes up to SATA II, it will work but will be a waste of some money.
 
The size is fine, but your machine won't get any benefit by using a SATA III drive, it's too old. Your machine only recognizes up to SATA II, it will work but will be a waste of some money.

That's great, thanks!

The drive is free as it's an excess one from work, so not worried about the cost.
 
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