|I wish I could be as optimistic as Derek.|
It's a pretty old system. It's done well to last this long. The old'uns were built to last.
However, I think it would struggle, even with Win7 trimmed back to the basics.
According to Sony's specs; Your system is already maxed out with 1.5GB RAM. So maybe no prospect for improvement in that department.
If you were to splash out on either Vista or Win7 install CD with a valid licence, that's going to cost you a minimum of £50 or so from eBay ($80 US ?)
If you were to factor in other costs, such as a mobo (though I doubt you'd need this), would it be worth it.
Chances are you'd be able to purchase a decent desktop PC with a dual-core CPU, maybe 3GB of RAM with Vista or Win7 for £120 or less, or however that translates in your currency.
And not to worry if it is a Vista PC. It has an undeservedly bad reputation which stuck with it after its disastrous release.
After SP2 it was much improved and is actually solid as a rock - though in my opinion, Win7 is the best ever.
Vista is supported until 2017, which isn't long. Whereas Win7 is good until 2020.
One good thing; as a rule of thumb, a PC that was designed for Vista usually runs even better with Win7. Vista forced manufacturers to fit better graphics, more RAM and decent CPUs to get it to run.
See what the other guys come up with, but if it comes to it, and you know what to look for, there are decent used PCs to be had.