I have a Dell Inspiron 1000. I have installed a 160GB hard drive, and it works fine. The drive is a 5400 rpm drive.
I considered getting a 7200 rpm drive, but I decided not to because (1) a 7200 rpm drive may run hotter, and this laptop runs relatively hot already, (2) 7200 rpm drive only go a large as 100GB in PATA/IDE while you can get up to 250GB in the 5400 rpm variety, and (3) some of the speed increase your looking for can be felt by using a drive with more storage as the increase in density can reduce read times at the same rpm level.
I was particularly interested in a large drive because I use Windows, Linux, and FreeBSD. I wanted to put them all on the same machine. That informed my choice to some extent.
The most recent BIOS for this laptop is Dell A08. It will recognize the drive, but the BIOS will claim that there is only 137GB. If you do use multiple systems on you drive, be aware that any system that does not originate before the last cylinder recognized by the BIOS will not boot with LILO or GRUB, though it may appear in the list. If you're setting up a monolithic Windows system, you may have to use a partion editior (I recommend GParted) to expand your partition past that last cylinder, depending on the drive copy program you're using.
In any case, moving from 4200 to 5400 will feel significantly faster, and I whole heartedly encourage you to make the upgrade.
Dell doesn't tell you this, but you can also boost the RAM in this machine way past its alleged limit. They tell you that this laptop can only be expanded in its one available RAM slot by 256MB. That slot can take a 1GB SoDIMM. If they didn't solder the other chip down, it could take 2GB, but that might be overkill for this processor and bus speed.
Also, the NEC-6650A is a DVD-RW that fits in this laptop. Really cheap on eBay.
I know this is an old thread, but I hope this helps someone. This laptop isn't a speed demon, but it can to a lot with a just a few tweaks.