That's a 2007 MacBook. It will take a maximum of 3Gb RAM and run Lion 10.7.5.
You'll need to buy Snow Leopard, to get access to the Mac App Store, and then purchase Lion from there. (However, Lion has many radical changes to the user interface that some people don't like, so you may find Snow Leopard sufficient.)
You may want to investigate whether you can get an SSD for it. It's got a slow SATA connection (1.5 Gbps), and I have no idea whether newer SSDs will work on that or not. However, putting in a solid state drive will be a massive benefit to the speed of the machine.
Snow Leopard, some RAM, an SSD: there are all reasonably cheap. You may need to buy a new battery at some point, if you haven't already. Even so, that's much cheaper than a new laptop.
What do you do with it? If it's just surfing, email, playing music and typing up some Word docs, then it will do you proud for another couple of years.
But a new machine would be significantly faster, more responsive, bigger storage, etc, etc. Not to mention shinier.
