If I do the above will the drive need a caddy or will it just slot straight in ?
If you have a unibody (black keyboard) MacBook Pro, then yes, you can totally use the old hard drive to replace the optical drive. In fact, I'm writing this post on a MacBook Pro with that exact set up :)
You'll need a caddy indeed. I'm using an OptiBay, which works fine. You can find cheaper alternatives on eBay, but I'm not sure how well they fit. However non-unibody (silver keyboard) MacBook Pros use PATA for the optical bay, and thus this won't work unfortunately.
+1 for Kiezpro but cheaper alternatives are available from macsales and from other sellers on amazon. Check those out as well.