I intend to use my laptop under Debian Sid for development, upgrading to Sid (unstable) is not mandatory, but you will probably want to upgrade to Sarge at least (currently testing) to have packages like module-init-tools which is for 2.6 kernels.
(You could also get back-ports of the packages needed, to be able to keep woody, but I think Sarge is stable enough.)
Add testing entries to your /etc/apt/sources.list, either manually by duplicating the stable ones or using apt-setup.
Now do the same for Sid, update and upgrade and go onto the next step.
Note: You can get security updates for all versions, Sid excepted, all you need to do is to add one line by version:
deb http://security.debian.org/ woody/updates main contrib non-free deb http://security.debian.org/ sarge/updates main contrib non-free