Sorry to resurrect but I'm on Lion 10.7.5 with my late 08 MacBook Pro (2.4 Ghz). I upgraded to a SSD (Samsung 830 Series) which I understand is closest to the Apple shipped model and 8 Gb Crucial RAM.
Lion flies - much snappier than SL and I've so far, had no issues with battery distortion, beechballs or anything. The SSD and the RAM have essentially given the old thing a new lease of life and therefore, I have no plans to upgrade it at this point.
Mountain Lion, for my Late '08, remains out of bounds until the reviews improve on the App Store!