iPhoto question

Sorry if this is in the wrong place.
Basically i am going going to try and organize my thousands of photos on iphoto currently iphoto 08. But i want to have a folder with many albums and then albums within albums. For example a trip to italy. I would like a folder titled trip to italy with many albums inside like different places i went, and then in each of those albums another album to show what i did in each of those places.
Is there anyway to do this, and is it better in iphoto 11.
My next question is that i currently run osx10.5.8 with a core intel 2 duo processor and am thinking to upgrade to snow leopard and then lion and then buy ilife to use iphoto 11. and also im going to upgrade my hardrive space to 500gb instead of 70 and increase my memory from 1gb to 4gb. so is this possible to do and if it is will it put to much strain on my labtop like the fans etc, as it is 4 years old. doing this will cost about £350 and i cant afford a brand new one.
Thanks in advance

It is the wrong forum, but don't worry the moderators will probably move it soon enough.

I use Aperture instead of iPhoto, but iPhoto will do essentially what you want. You can make a Folder and title it "Trip to Italy", then create Smart Albums for each discrete part of your trip and drag them into that folder. Not really sure what the purpose of Albums within albums would be though.

If you plan on upgrading the OS you probably will want to as a minimum upgrade to 2GB RAM (not a bad idea whether or not you go to Snow Leopard or Lion).

Moved to correct forum.

You can't have Albums within Albums, but you can have Albums within Folders within Folders.

From iPhoto's File menu, choose the New Folder option, call it Italy. Create another Folder, drag it into Italy, call it Rome. You can now create Albums in Rome to reflect what you were doing.

MightyGem's suggestion will work, but as is so often the case, the functionality you seek is already built in -- no work from you required (except the bit I'm about to tell you!).

The view you want is "Places." Shows a map, with a pin in Italy. Click on it. Now it will show any cities in Italy where you took pictures. Click on Rome. Now it shows you all the pictures you took in Rome. Simple.

This, of course, relies on your camera having inserted location data into your picture's EXIF files. Most non-phone cameras don't do that (though that's starting to change). So you'll have to do a bit of manual work to make this happen.

All you have to do is select the event(s) or albums with your Italy pictures, select the photos you know were taken in Rome, select "get info" and edit the location data for all the selected pictures en masse. Repeat for other cities as needed.

Once that's done, the "Places" view will work automatically.