Q: OS X Lion Upgrade...?

Yes, but you would have to purchase it now or wait until Mountain Lion is released this month and purchase it instead.

Apple - OS X Mountain Lion - Read the technical requirements.

Macs that will support OS X 10.8 Mountain Lion

As usual, the newer the Mac the better:

1. MacBook Pro – 13″ from mid 2009 or later, 15″ from late 2007 and newer, 17″ from late 2007 and newer
2. MacBook Air – late 2008 and newer
3. iMac – models from mid 2007 and newer
4. MacBook – 13″ aluminum from 2008, 13″ from 2009 and newer
5. Mac Mini – early 2009 and newer
6. Mac Pro – early 2008 models and newer
7. XServe – early 2009 models and newer

Macs that are NOT expected to support OS X Mountain Lion

Older Macs and those with weaker GPU’s will likely be left behind:

1. Anything with an Intel GMA 950 or x3100 integrated graphics card
2. Anything with an ATI Radeon X1600
3. MacBook models released prior to 2008
4. Mac Mini released prior to 2007
5. iMac models released prior to 2007
6. Original MacBook Air

Your model must have a 64-bit EFI boot ROM. See OS X v10.6- Macs that use the 64-bit kernel

An easy way to tell if you are running a K64 kernel is to use the uname command-line program. The "x86_64" in the excerpt below means that we are running a 64-bit kernel. If the output showed "i386" instead, that would mean a 32-bit kernel.

$ uname -a Darwin... root:xnu-1456.1.25~1/RELEASE_X86_64 x86_64

If your computer does not boot into the 64-bit kernel automatically you can force it to by restarting and holding down the "6" and "4" keys after the chime. Re-run the above command in Terminal. If you don't see "x86_64" then your model does not have a 64-bit EFI boot ROM and cannot boot Mountain Lion.

No, because the free upgrade was time limited. You had 30 days to claim your free upgrade. That time has come and gone.

Now all you can do is separately purchase Lion or wait and purchase Mountain Lion, as I said previously.