Save it or replace it? I have an mid 2009 MacBook Pro 13" (processor: 2.26 GHz Intel Core 2 Duo, memory: 2 GB 1067 MHz DDR3, HDD: 160 GB SATA) and it has started giving me trouble a few months ago. It runs on Max OS 10.7.5 and has been getting excruciatingly slow. Additional software is Adobe CS4, Skype and OpenOffice.  I mostly use it for OpenOffice work, internet research, Skype, and movies.

The cost to fix it with a new battery, new RAM and new HDD which would get me in the price range of about $300 to 400 in my estimates.

What reasons should could help decide between fixing it or rather save up for a replacement. MacBook Pro 13" again with a non-retina display?
My mom is still using my 2009 MBP without any issue.  If the CPU is fast enough for you, I'd recommend refurbing it.  

I'd also agree with Robuust about getting an SSD.  The prices are low enough now that you should be able to get 250GB for &lt; $250 and anything smaller is still &lt; $1/GB.  If you've been getting by with a 160GB spinning drive, you'll be amazed by the speed increase.  Mine went from a 40s boot time to about 12s.

The only caveat I see is that my mom's MB DID need a new keyboard a couple years ago due to the mouse button failing to click anymore.  That was a $80 repair -- bought one from ebay and installed it myself.  So if you have any kind of HW problems, you would need to address those down the road.

Then again, you can get a complete late-model MBP on ebay for $700-ish.  If you aren't afraid of buying a used one, that may be the better way, but for what you are doing, the old one should continue to work well.