can i upgrade this to todays system?

It might be able to run a minimalist Linux distro pretty well but I wouldn't expect it to handle Win XP or a more mainstream Linux distro very well (and Vista is very very unlikely to run at all well).

In terms of upgrading the hardware, laptops don't really let you do much other than upgrade the RAM and hard drive and with something that old you'll probably have trouble find RAM modules that'll work (older laptops tended to be really picky about RAM) and you won't be able to upgrade it beyond 256 MiB (if that), a new PATA hard drive would fit but the BIOS would probably have a fit about a gigantic modern hard drives (even the smallest you could get would be bigger than it was designed to handle).

No. Unfortunately, it's too old to be upgradable. Many of the newer programs and downloads won't work properly. To top that off, Windows no longer offers support for Windows 95. It could be good for secondary program storage or other side work. But for everyday use, it's done.

If you throw it away =)