These are good online stores for Mac compatible RAM
OWC http://eshop.macsales.com/shop/memory/MacBook/DDR2/ - 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 instructions on replacing RAM in a MacBook with a removable battery. http://homeoffice.consumerelectronicsnet.com/articles/viewarticle.jsp?id=44404
If you don’t have the tools to open up the MacBook OWC has a set for $5.
For a new hard drive try Newegg.com http://www.newegg.com/Store/SubCategory.aspx?SubCategory=380&name=Laptop-Hard-Dr ives&Order=PRICE
Or OWC for regular hard drives and SSDs http://eshop.macsales.com/shop/hard-drives/2.5-Notebook/
Here are instructions on replacing the hard drive in a MacBook with a removable battery. http://creativemac.digitalmedianet.com/articles/viewarticle.jsp?id=45088
To transfer your current hard drive I like the free application SuperDuper. It makes a bootable copy of everything on your hard drive http://www.shirt-pocket.com/SuperDuper/SuperDuperDescription.html You'll need a cheap SATA external hard drive case. Put the new drive in the case then format and partition the new drive and clone your old drive to the new one. Check that it's set up right by booting up from the external drive. Then replace your old hard drive with the new one and put your old one in the external case.
Here's a cheap SATA external hard drive case on Amazon http://www.amazon.com/Vantec-NexStar-2-5-Inch-External-Enclosure/dp/B002JQNXZC/r ef=pd_cp_pc_0
You can put two 2gb RAM sticks in your model 2,1 but it can only use 3,3gb. This is a hardware limitation and cannot be changed.
OWC tests have found that there is a slight speed increase with having two 2gb sticks in rather than one 1gb and one 2gb. Your model is in the gray lines at the bottom of the graph. http://eshop.macsales.com/shop/Memory_Benchmark/Apple_MacBook/