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That machine will have no problem with Adobe CS4, although you can never have too much RAM. I would shop around for more memory and bump it up to 4gb, here’s a good place to start http://www.crucial.com/uk/
You will probably find that you can plug your existing monitor into it so screen size shouldn’t be a problem.
As for Snow Leopard, my understanding is that it will retail for something like $28 in the US which is about £17 (according to the currency converter widget on my mac :D ) and what Apple generally do is give a free upgrade to anyone who bought a new mac just before the release of a new OS.
I made the switch about 4 years ago and have never looked back, for me now, the rare occasion when I have to use a pc is something akin to a trip to the dentist, only without the saving grace of a pretty dental nurse.