How to reformat Macbook 7,1 on OSX 10.6.8 with a 10.6.6 disc? or should I purchase 10.7? Can I reformat in the process?

I recently purchased a used Macbook 7,1 that has OS X 10.6.8 already installed on it. I want to reformat the drive in order to remove the old users files and settings.. but I have a macbook pro OS X 10.6.6 disc only. When I insert it, it says "Mac OS X Leopard cannot be installed on this computer".
How can I reformat the laptop?
I eventually want to install OS X 10.7 also, If I purchase and download it will it let me reformat during the upgrade process?
Thanks for your help.

dearsaadkhan wrote:
Thanks for the quick response,
But I don't have the original discs and don't want to spend the extra money on the retail leopard discs, so will downloading the Lion update let me reformat in the process? since i already have 10.6.8 installed.
and do apple let you order replacement original discs?
Call Apple Customer Services 1-800-692-7753 with the serial no. of the MB and they will in all probability be able to supply you with copies of the original discs for a handling and postage charge. (about $16 per disc)
The retail SL disc is about $30

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