I had the same MacBook Pro (same processor, same RAM) and my wife has it now. I put Lion and Lion update on it early on and we've had no problems at all. Lion feels fine on the machine, no performance problems at all.
To be fair, my wife rarely taxes things like people in this discussion might but she does leave Safari, iTunes, and a few more applications running a lot and she's never crashed or yelled at me for ruining her life ;)
I bought Lion for my computer (current model MBP) and made an install USB drive with the Lion installer knowing I'd be putting it on her machine as well. I use SuperDuper to back up our machines and I made a backup of her machine, booted it from the Lion USB drive, used disk tools to erase and repartition the drive (just to clean things up), did a clean install of Lion, then used migration assistant to pull her account back in.
I didn't copy over the backup until we were sure Lion was working right and she had everything and in fact, we had no problems and she's been using it ever since, including the recent upgrade for iCloud which she uses too.
Tip: The best way to make that machine last even longer is to put an SSD in it. OWC has decent SSDs and the speed increase will blow your mind. You might consider doing this kind of upgrade at the same time you do the Lion upgrade, not because Lion needs it, more just to give you another year on that machine before buying a new one. If you buy a new one you can take the SSD with you if you like, either as a replacement internal drive or as an external.
Unless you need huge storage an SSD is the single best performance investment you can make in an older MacBook Pro that's capable of running Lion.