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Yes, you should upgrade the memory to 8 gb and yes, you should upgrade to and SSD. It doesn't matter what SSD, because you are indeed limited by SATAII interface. Just choose a modern one.
 
Your MBP will work fine with 8gb. Apple only offered it with a 4gb option but the 8gb upgrade works fine. As long as the memory modules are matched there are no performance problems.

Only problem with a SSD on Yosemite is the inability to enable trim. The kext signing requirement makes it impossible for 3rd parties to offer software to enable it. Otherwise it works well with a SSD.
 
Mavericks, Mavericks, Mavericks! Let buggymite mature a bit more... (or just let it be, 10.9 is great for an 2008 model, no need for anything newer really)

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btw, my MBP17 from 2009 is upgraded with an crucial M4 256 GB SSD and 8 GB crucial RAM. Trim enabled, works great!

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...and runs 10.9.5!
 
Speaking from my experience with a Late 2008 MacBook (non pro, but similar).

For an SSD, Crucial makes a great product for a great price. I've installed over 40 MX100s in PCs and Macs in every capacity. Haven't had one come back yet.

For RAM, go with 8GB 1066 MHz DDR3. OWC makes good chips, Crucial and Kingston should be just fine too. I'm assuming your firmware is up to date at this point, so it shouldn't be an issue.

For the OS. Yosemite is alright. But as mentioned, Mavericks seems to offer the best performance and as of 10.9.5 it's finally what I would call "stable". Plus you can install and use TRIM Enabler with it. I'm running it on my Late '08 as well as my Late 2013 retina MBP. I actually downgraded from Yosemite :cool:

It's more stable than it was at release though. But if you don't need the features, a clean install of Mavericks on to a new SSD will do wonders for that MacBook.
 
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