do surge protectors go bad?

My iMac is connected to a Belkin SurgeMaster that is at least 4 years old. Can they stop working?

They can degrade, yes, though I haven't seen any good figures on how long a given surge technology will last. There's some informaton on sites like this:

http://www.ehow.com/way_5480481_should-replace-surge-protector.html

but how reliable their informaton is I don't know. When in doubt, replace. Even a high-quality surge protector such as the units from Tripp Lite, or a power conditioner such as the LineR from APC, are cheap when compared with the price of replacing the main logic board in an iMac.

Can I use a 1500 watt Lasko Heater on the same surge protector or shoudl I get another?

Absolutely do not plug that heater into the same surge protector. I'd advise not even plugging it into the same AC circuit, not unless you get something better than a $30 surge protector to protect your computer.

Regards.