Your MacBook can take 4GB. Go with as big and fast a HD as you can afford. The 320GB 7200RPM drive in my MacBook (Seagate Momentus) is highly recommended. RAM from Crucial or newegg, hd from newegg.
HDD- 2.5" SATA (either 5400RPM, or if you want to upgrade speed, 7200RPM)
you might want to purchase an external enclosure so you can use Carbon Copy Cloner to clone your drive over USB (i've done it many times with no problems).
and www.crucial.com has a system scanner which tells you exactly which RAM to buy and links you to their products which you can add into their cart. they have really great RAM - it's in both my Mini and my MacBook 🙂
With the 7200 speed drive do you have any issues with heat build up and battery drain? I've read a few conflicting stories about the drives heating up etc? Any ideas?
Also will newegg ship to the UK? Do you know of any good uk distributers?