documents, applications or both?
It would be better to do a clean install of the OS and applications if you do that... documents are documents and are transportable across whatever machimes... If you are talking about doing a back-up and restore, I would not trust doing that with the OS and aplications, though I suppose it is technically possible... I wouldn't do it...
Yes. I know you can upgrade the macbook hard drive, but if you do put in a new hard drive can you restore everything from the old hard drive. Or should buy an external hard rive.

Chowhound
Comic Vine
GameFAQs
GameSpot
Giant Bomb
TechRepublic