You are as up to date as you can be with your Mac. By the way, that's from 2006, not 2005. The first Intel Macs, in fact the first ones with 13" screens since 1998, were made in 2006.
If you are concerned about iCloud compatibility, read https://discussions.apple.com/docs/DOC-2551
If Lion is essential for another application, read about getting used and refurbished Macs first:
If a new one is out of reach, and the pitfalls of upgrading to Lion if that's where you are forced to go: