How fast is the processor? Processor upgrades can be very expensive, I've seen them go for around $1000.
The first thing I would upgrade is the hard drive. What kind of work do you do on your computer? If you're doing video, you'll need a big HD.
Since you have 704 MB of RAM, I'm guessing you have a 512, 128, and 64 MB chip. With Mac OS X, you can never have too much RAM. It makes a big difference in performance. I would take out the 64, and put in a 256 for about $30 or a 512 for around $50. That will give you 896 MB. Make sure that you buy PC133 RAM if you have a Mac with a 133 Mhz bus, otherwise it won't work. Mac's with a 100 Mhz bus can use either PC133 or PC100.
I buy most of my upgrades from OWC
. You can probably get cheaper RAM if you search dealram.com
, but make sure it's good quality.