Why does Kernel Panic happen, with the "need to restart" message appearing, whenever I try to put my Mac into Sleep Mood?

My Macbook started to act in a weird way. Whenerver I try to put my Macbook to Sleep this message will appear.

All means to put Macbook to sleep end up with this message showing up. I thought it was due to some application but it's the same even without any app running. It's been like this for 2 days now and it's worring me. I've read an article about the Kernal Panics and tried what it recommended. Updated my softwares, logged in with safe mood and even left Macbook turned off for a whole day but it's the happens.

So, I'll really appreciate if you could help me solve this problem.

The Macbook I'm using is the Black Macbook, Mac OS X (10.5.8), 2.4 GHz Intel Core 2 duo, and 2 GB Ram.

Thank you for helping.

P.S: do you recommend upgrading to Snow Leapord? or should I get a new one? Though I'm reluctant to say good-bye to this Macbook, which has been through **** with me during collage since 2008.