It's not worth replacing the drive. Since the laptop uses the old ATA-5 interface, it won't be able to support modern, fast SATA drives, so the potential performance increase is pretty limited. More importantly, from a quick Googling that laptop is using a Pentium 4 processor, so the harddrive is hardly your bottleneck. Max out the RAM in the system, check to see if the HDD is failing by checking the SMART logs
with Crystal Disk Info (look at the "Health Status" indicator), and if it looks good, optimize the drive with
MyDefrag.
Really though, you can pick up
a brand new Asus laptop for under $500 with a Pentium Dual-core, 4GB of RAM, and Windows 7 Home Premium 64-bit. Just make sure to avoid anything with an AMD processor and you'll do fine. The weight, heat, and battery life difference will be amazing, in addition to the performance difference. (Note that if you're interested in playing games you should get a laptop with a videocard).