Our vintage 2006 MacBook Core 2 Duo can, in theory, run Lion . I just upgraded it from Snow Leopard, which it ran reasonably well albeit with lots of fan activity.
I didn't upgrade happily. There's a reason I've waited this long. I wanted to stay with Snow Leopard, but Apple's MobileMe migration was going to cause problem for Emily's Address Book/iPhone Contact sync. Yes, that was the primary reason. Sad.
I upgraded all the apps we use, said farewell to AppleWorks and many games the kids no longer use, removed all PreferencePanes and extensions, unplugged all cables, did a safeboot cleanup and two completely independent backups (one a clone). Then I upgraded.
It seemed to go well enough once Spotlight rebuilt its indices and I refreshed everyone's account. it does take a very long time to log out; Lion is saving a lot of state information and the MacBook doesn't like that.
It went well enough, that is, until my old account. Then things got slow. Even though I'd updated VMWare Fusion to the final "Lion Compatible" 3.x version, I suspected it was the problem. I tried running my VM -- that was a disaster. After power down and a safe boot I uninstalled VMWare 3 per directions.
That helped a great deal. In fact, the laptop is quieter than it used to be. I suspect Fusion has been causing problems for a while .
So will I try Fusion 4?
No, not on this old machine. I really don't use my VM's very often, and neither Parallels nor Fusion are sold through the App Store. To do their magic without Apple's help they must be hacking the underlying OS; and OS X is increasingly hard to safely hack.
For now the MacBook seems to have survived Lion - albeit at the cost of a little used VM I'm probably better off without and a dozen or so older games -- and AppleWorks.
So far, better than it could have been. I am, however, regretting obeying Lion's command to update my Airport firmware .
 That's almost six years ago! I'd forgotten how old it really was. Maybe I shouldn't be too upset it can't run Mountain Lion.  Lion really wanted me to undo my Time Capsule firmware regression, so I did. Now I'm seeing more problems with losing connectivity, i saw a -1 error again, and I'm again having to rebuild Spotlight indices of the backups. I have a strong feeling I'll be reverting again. I seem to be the only one with this problem though.  My best Fusion experience was version 2 with a Windows 2000 VM -- on that old MacBook probably with Leopard (10.5). It's never worked as well since.
Update 6/17/2012: Logging out and user switching is much slower. It takes about 20-30 seconds to log out and 15-20 to switch. I think it's because of all the context saving Lion does; this old machine can't handle it. There are ways to disable saving of application states, but I'm going to wait a while on this one. Otherwise things aren't too bad. The machine is quieter than it has been for years, the fan no longer roars. I suspect that's due to uninstalling Fusion 3.x, but it could be a Lion improvement.
Update 6/17/2012: I went through each user account and turned off 'save and restore windows' in system preferences. Then I logged out and unchecked the restore windows on login option shown there. No logout and login is back to Snow Leopard times. Now I have to figure out what to do about #$@$ Google Software Update. it keeps popping up in managed accounts that don't have privileges to run it.