I've seen the same issue on 3 different MacBooks in the past week, a computer that basically ceases to function due to a completely filled hard drive. Your computer needs free space (aka headspace) to be able to 'think', room to place the data while it's busy computing. The original MacBooks shipped with hard drives as small as 60 GB and up to 120 or 160 GB, which at the time was a fairly decent size considering the proportions of the files it was using. iTunes libraries have expanded, cameras have increased their pixel resolutions and people are downloading movies at a rampant pace, leading to the problem of lack of storage.
Luckily there's no reason not to keep that computer on the info super-highway, and the fix is cheap and easy. There are two ways to mitigate this problem, either by upgrading the internal hard drive or by using an external drive to store your files. The former is my preferred method and a 500 GB internal drive can be yours in less than 24 hours and for a cost of around $225.00, complete with a restoration of your old data onto the new drive.
The latter is just as easy and can be as cheap as $100-$150 for a 500 GB or 1 TB drive. Make sure you format the drive using Disk Utility as Mac OS Extended, since your MacBook can communicate with the drive right out of the box, but you will likely have problems dragging larger files onto the drive if it's formatted as MS DOS FAT. Drag your movie files and other large folders directly onto the drive and erase them off your internal disk to free up headspace. If you have a substantial iTunes library you can use the external drive as the source of your music files, same goes with iPhoto and your iMovie media files. You can continue to use the external drive as your Time Machine backup (also highly recommended).
Times are tight and most people don't have the budget to buy a brand new computer every time their older machine fills up. This is quick, cheap and easy way to extend the life of your older machine.