You need to understand the difference between an Update and an Upgrade.
An Update is a free change within an existing Operating System. Such as the .11 added to 10.4.
An Upgrade is a complete new Operating System that must be purchased. Such as 10.5 Leopard to 10.6 Snow Leopard.
The Early 2006 model 1,1 Core Duo can only run a maximum of 10.6 Snow Leopard. The models Late 2006 Core 2 Duos 2,1 through Early 2008 4,1 can only run a maximum of 10.7 Lion. The Late 2008 model 5,1 Aluminum Unibody through the Mid 2010 White Unibody model 7,1 can run 10.8 Mountain Lion.
The Snow Leopard 10.6 DVD should still be available from Apple for $20. You will have to call Apple Customer Care 1-800-692-7753 or 1-800-676-2775 to purchase it. It may still be in the Legacy Products list.
If they no longer have any in stock you will have to buy it from eBay or Apple resellers that still have stock. But you will have to pay a premium since the DVDs are no longer being made. Snow Leopard DVDs are already up to $100 on Amazon.
You can upgrade straight from 10.4 to 10.6 with no problems. Any program that runs under 10.4 should run under10.6. See this list for compatibility with 10.6: http://snowleopard.wikidot.com/
You might have to upgrade some drivers for printers, etc.... And you will have to install Rosetta if you have any Power PC applications http://www.macobserver.com/tmo/article/snow_leopard_installing_rosetta/
I recently upgraded an older MacBook (model 1,1) straight from 10.4 to 10.6.
A retail 10.5 Leopard disk will run you around $200
The Apple store won't stock the Snow Leopard DVD. It is however now available from the online store again from;
or for the UK: