I have Mac OS X version 10.5.8 what should I grade to and how?

Start by checking if you can run Snow Leopard:

Requirements for OS X 10.6 'Snow Leopard'

http://support.apple.com/kb/SP575

Whilst Apple have withdrawn Snow Leopard from their stores, you can still get it from Apple by calling 1-800-MY-APPLE (if you are in the USA) and they will supply the SL DVD for $20 for a single user, or $30 for a family pack that covers up to 5 Macs. You can also purchase the code to use to download Lion from the same number (Lion requires an Intel-based Mac with a Core 2 Duo, i3, i5, i7 or Xeon processor and 2GB of RAM, running the latest version of Snow Leopard), or you can purchase Mountain Lion from the App Store - if you can run that:

http://www.apple.com/osx/specs/

If you are outside the US call your national Apple Helpline:

http://support.apple.com/kb/HE57

If you're in the UK, use this number: 0871 508 4400

When you have installed it, run Software Update to download and install the latest updates for Snow Leopard.

To use iCloud you have to upgrade all the way to Mountain Lion:

http://support.apple.com/kb/HT4759

This tip will tell you if you can run 10.6:

https://discussions.apple.com/docs/DOC-2455

Other than iTunes, most iLife applications only come with the original installation discs that came with your computer (note people who bought new Macs after 10.7's release don't have an original installer disc, and have to use the restore partition to reinstall their software). That said, you may be able to call Applecare for the original installer discs if lost. That version may not be compatible with 10.6 or later, so check the links on my tip to verify before getting it for the operating system you finally intend to run. Starting with 10.6.6 Apple created a Mac App Store that included some of iLife, but not iDVD. iDVD was last made available as part of the iLife '11 box set which you may be able to find in some Apple reseller stores or used and refurbished Mac stores. See my user tip on iLife to figure out where your machine fits in:

https://discussions.apple.com/docs/DOC-1707