My 2 cents worth:
First decide what you want your computer to do for you. If you just want to browse the web, email, use a word processor, etc, your present machine will do just fine (I myself have an old Peforma 5300 to go along with my iMac). However, you should shop around for a 56K modem if you have a slower one (I believe these machines shipped with a 14.4 model). My second suggestion is: get more RAM. Upgrade to 128 MB, it's worth it. RAM is dirst cheap nowadays. Check the mac-specialty web sites to make sure you get the right kind for your machine or try
http://asu.info.apple.com/swupdates.nsf/artnum/n10084. By the way, you should not upgrade beyond your current OS, or maybe up to 8.1, due to your processor and RAM limitations. There are plenty of sites and other resources with advice on upgrading older macs. The first that comes to mind is the July issue of MacAddict magazine which I happen to have on my desk as I speak.
On the other hand, upgrading that old Mac to a standard comparable to todays machines will be far more expensive than getting a brand new one. If you want to run the latest software (or Mac OS X, which is spectacular) I would suggest any machine with a G3 of G4 processor running at 350 Mhz or more (think iMac, Powerbook, iBook or PowerMac G4). With a good amount of RAM, any one of these babies ROCKS!
Hope this little info helps. Best of luck.
A.O.
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Once you go Mac, you never go back!