One contributing to factor to the system performance, or lack of, could be your memory. Both Lion and Mountain Lion have minimum memory required of 2GB, however, a number of people have found they needed to upgrade to 4GB to get reasonable performance.
The other thing to check is free disk space. The system needs a minimum of 10GB, or generally 10%+ of your drive to be free of data for systems usage. The system can really slow down if free space gets minimal.
Apple doesn't make any RAM. They buy it from the same manufacturers that third party vendors buy from. But Apple charges double for the same RAM that you can get online.
The 120GB is the hard drive in your MacBook the 2GB is the Random Access Memory.
These are good online stores for Mac compatible RAM
OWC http://eshop.macsales.com/shop/memory/Apple_MacBook_MacBook_Pro/Upgrade/DDR3_Whi te - They offer Mac tested RAM at very good prices.
Crucial Memory http://www.crucial.com/ - good place to buy RAM from all over the world. They also have an excellent memory selector that allows you to choose memory based on your computer's model
Data Memory Systems http://www.datamemorysystems.com/apple-memory.asp - another good, cheap place to buying RAM if you live in the U.S.
Here are video instructions on replacing the RAM on the White Unibody.
If you don’t have the tools to open up the MacBook OWC has a set for $5.
2GB or 4GB refers to your RAM (Random Access Memory) or semiconductor memory versus the 120GB which is your internal hard drive. The RAM is on cards that can be replaced to increase the amount of memory in your system. Here is the Apple note on how to change your MacBook memory.
You can upgrade your memory, however, Apple charges twice what others do. Apple doesn't make it's own memory, it resells others. For example, in my iMac, it came with Samsung memory.
Two respected and recommended sources for memory are OWC and Crucial. If after reading the note above you don't want to change your memory, you could go to an Apple Authorized Service Provider who could do that for you (Apple won't install memory they didn't sell). This should show you all the service providers in the Baltimore area.