Q: Can I upgrade a IMac 2007,

Processor upgrafes aren't really an option in iMacs's. Memory of course and disks but the rest is pretty much not doable.

Looks like that model can go to 4gb, 2x2gb See iMac: Memory specifications and upgrades

How much the extra 2gb will help is hard to say. Open Activity Monitor and take a look at page outs and swap used while you use the machine. If either of those increases more memory will help.