If that’s a Celeron-M 1.6 GHz, the perfomance gains are noticable – that Celeron-M is roughly equivelent to the Pentium M 1.4-1.5 GHz, but runs on a newer 900 series Intel chipset with SATA.
Mostly, however, you’re better off adding more RAM. Also, if the HDD is a couple of years old going from a 5400 RPM drive to a newer 5400 RPM drive with higher capacity (and hence aerial density) will improve performance as well.
Full advantage? No, but drives are cheap nowadays. That said, if I’m putting one into my notebook I’m getting a 5400 RPM part for the sake of battery life.
Actually, the next HDD I’m getting for my laptop is going to be a Momentus 5400 PSD drive – which is actually SLOWER than my current drive… but oooh the power savings are sexy. I have one in my VGN-SZ650N, which replaced the VGN-SZ430P, and it boosted battery life up by 60-120 minutes, depending on usage.