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I have Snow Leopard OS X 10.7.8, now I want to upgrade to 10.7, how is this done ?

I assume you meant SL 10.6.8.

If your machine does not support Mountain Lion and you want to go to Lion, you will need to call Apple at 1800MYAPPLE and for $19.99 they will sell you a code that can be entered in the App Store to DL Lion.
 
I would definately go to lion... I have put several of those older macbooks on lion (and even one on mountain lion with a little tweak) and I am quite happy

i did not notice any additional fan noise... but then again it is sitting next to my quad SLI desktop so I may not have noticed
 
My late 2008 Aluminum 2GHz MB runs admirably even with 10.8. You just have to ensure plenty of RAM and HDD space are available so virtual memory isn't throwing a wrench into the speed. I don't see why you would want 10.7 over 10.6 though. I think I upgraded to 10.7 in the past but nothing big. I think I'm stuck in a 10.6 mindset.
 
I'm planning to upgrade also to 10.7, maybe it's more better compared to 10.6
 
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