Jay is absolutely correct. That drive will work just fine. You may have to format it for OS X when you get it (many drives come pre-formatted for use with a Windows machine), but otherwise you should be fine.
If you don't have one already, I highly recommend purchasing a Firewire enclosure for your hard drive. You can put the new drive into the enclosure, format it properly, then use Carbon Copy Cloner or SuperDuper! to clone the old drive to the new one. Once the cloning process is complete, all you have to do is remove the old drive & install the new. You may want to test the new drive first, though, by rebooting your computer with the Option key held down & choosing the Firewire drive as the boot drive. If it works, you're set!
I upgraded to a 500GB drive not too long ago (it's only 5400 rpm, though) and it's been fabulous. I also upgraded the RAM to 4GB, and it was almost like I had a new machine!