I am thinking about upgrading my hard drive as well.
I do not have a Firewire external hard drive.. only USB. Is that ok?
And where do I get an enclosure? (sorry I'm so new to this hardware stuff..)
I just did this last week so I speak with the voice of experience.
I bought an external 250Gb drive (mine was FW but it doesn't matter it can be USB).
Using the latest version of super-Duper (free, but if you're running Leopard, make sure you get the latest one, the earlier one doesn't work).
Plug in the external drive and run Super-Duper, backing up the whole drive to it and making it the bootable drive when it's finished (that's a Super-Duper option).
When it's finished, shut everything down and unplug it all.
Crack open the external drive enclosure, crack open the MacBook and swap the drives.
Done.
You can then put your old, smaller drive in the enclosure and after verifying everything is ok with the MacBook, format the old drive (now in the enclosure) and use it for whatever you like. Media, music, pron, your choice.
The instructions for replacing your drive are all online. It's really quite simple. But remember to use the latest version of Super-Duper if you're running Leopard. The old version will *NOT* work and you'll be left with a grey screen and a spinner at the end of the install.
Cheers.