Your system should be able to support the newer OS's (most of the Core 2 Duo systems are 64bit clean). Don't forget to upgrade your current apps as well here (if they are 32bit).

You'll need to do a few things here to upgrade to Lion.

• Upgrade the RAM to 4 GB Note: Not all of the RAM will be accessible to the OS (only 3 GB). But its best to use two 2 GB modules (matched pair) Vs a mix of one 1 GB and one 2 GB module.

• Upgrade your EFI firmware follow this Apple TN EFI & SMC firmware updates for Intel-based Macs

• Get an external HD to copy over all of your stuff as you will need to reformat your current HD (requires a different format type). You may think about upgrading the HD to a larger unit if you have 250 GB or smaller HD. Note: your systems HD SATA I/O is SATA I (1.5 Gb/s) make sure if you get a new drive it is able to run at this speed. Many newer HD's have a jumper to set to the lower SATA speed.

Consider the costs (RAM & HD), the time, and if your current system will suit your needs for a couple more years, before starting your project.