To both posters - why are you potentially risking your warranty and certainly data loss by installing new drives?
Consider whether spending the money on a Firewire external hard drive will be a better idea. You would have way more space (250 Gb more rather than 40 Gb more) and faster performance for the same money and no installation work. You would have a bootable backup system drive, plenty of space for daily backups, and room to put any extra files that you don't need to carry with you on the road, thereby freeing up space on the internal. There is a small performance boost going to 7200 RPM, but it is marginal improvement for most uses.
rody2K: Yes, you will first have to boot from the OSX CD, format the drive with disk utility, then install the OS and the included programs. Unless you have backed up your User data first, you will lose all of your data, settings and emails etc.
If you are bound and detweermined to do this, a better plan may be to get an external USB/SATA enclosure, format the new drive in the enclosure, use Carbon Copy Cloner to image your entire hard drive to the new one, THEN install the new drive.