Upgrading my parent's Mac....?? I have a PC and don't know what to  :(

I am trying to get a newer version of iTunes on my parent's computer (currently Mac OS X 10.2.8) and apparently need to upgrade to 10.3.9 or 10.4.7 to get iTunes 7.6 (we have iTunes v3.0.1 which came with the computer). I know little about computers in general but what I do know is that I would usually call for help if I need it and with their Mac I'd have to pay money which I can't afford to do right now. I know enough to download the updates but I have a few questions.
1. The reason my parents haven't updated the computer is that they are afraid all of their files will disappear with the upgrade so I don't want to do this and have their fears come true. I'm assuming that unless i do an erase that everything should be fine?
1b. With Macs can't you upgrade but still have your previous system still intact and pick which system you turn on? I think they have Mac OS X 9 as their other system but we never use it. My dad thinks that he lost files but maybe they are just on that system?
2. Do these internet downloads cost money? I did have to give a billing address to log on to this forum so they have my info....not that I gave a credit card #.
3. I can't go from 10.2.8 to the newest 10.5.1 right? I need to make gradual upgrades. So if I have 10.2.8 what are the upgrade downloads I'd have to take to get to 10.5.1? (or for now at least 10.3.9)
Finally I have an ipod question. I have an old school mini and used my work computer's iTunes to do everything. I have since left that job and can't add or change my playlist because my PC wasn't updated enough to download itunes (I have windows xp). So I guess my question is shouldn't I be able to plug my iPod into the mac that has the iTunes 3.0 and have my playlist go on the computer as a temporary playlist of sorts? Or is this version of itunes too old for that becasue it isn't working for me (I'm just copying the file which is taking 1 hour so far).
I know what you are thinking...I'm outdated and don't upgrade...But I want to fix that. Hope you can help me Thanks

Welcome to  Discussions call18222!
I'm guessing that the Mac is a Power Mac G4, is that correct?
If so, a Power Mac G4/1.25 GHz can support Panther 10.3.x, Tiger 10.4.x, or Leopard 10.5.x.
Mac OS X Versions 10.1, 10.2, 10.3, 10.4, and 10.5, are complete system upgrades that must be purchased.
Once an OS has been installed, the point upgrades, such as 10.1.x to 10.1.5 (Final) 10.2.x to 10.2.8 (Final), 10.3.x to 10.3.9 (Final), 10.4.x to 10.4.11 (Pending), and 10.5.x to 10.5.1 (Pending), can be downloaded for free.
Tiger is available for purchase at The Apple Store (U.S.).
If your Mac meets the Leopard System Requirements, the Full Retail Version, of the Leopard Install DVD, can also be purchased at The Apple Store (U.S.).
Panther, is no longer available directly from the Apple Online Store, as Leopard 10.5.x, is the most up to date OS.
If you know what to look for, a Full Retail Version, of the Panther Install CDs, or a Full Retail Version, of the Tiger Install DVD, can be purchased, sometimes less expensively, at some online Apple retailers, Amazon, eBay, FastMac, HardCore Mac, AllMac, etc.
This is the correct one Mac OS X 10.4.6 Tiger, (DVD) Retail at FastMac.
And at HardCore Mac.
Notice that both are more expensive, than The Apple Store (U.S.).
Be sure not to purchase grey, upgrade or machine specific CDs or DVDs.
Panther is only on CDs, not DVDs.
Tiger and Leopard are on DVD.
The discs should look exactly like the images in the above links, and not say Upgrade, CPU Drop-in DVD, or "This software is part of a hardware bundle purchase - not to be sold seperately." on them.
Additional info in these links.
Using OS X Install CDs/DVDs On Multiple Macs
What's A Computer Specific Mac OS X Release
Software Update, Upgrade: What's The Difference?
Caveat Emptor!
If any are presently available, examine these items very carefully, and if in doubt, ask questions of the seller before purchase!
Panther On eBay
Tiger On eBay
Leopard On eBay
Once Panther 10.3.x is installed, you can use the 10.3.9 Combo Update, to upgrade to the final version.
If your Mac meets the Tiger System Requirements, you could also consider installing that, and then use the PPC 10.4.11 Combo Update, to upgrade to the current version.
If Leopard 10.5.x is installed, use the Mac OS X 10.5.1 Update.
Review these KB Articles, for the Panther System Requirements, and the Additional Panther System Requirements.
All listed System Requirements, are the bare minimum.
For optimum performance, additional Memory/RAM is recommended.
The 768 MB in your parent's Mac, should be sufficient.
ali b

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