Ahhh now..
That's quite a personal matter!
For me, it would depend on how much of a bond (lmao, no really) I had with the lappie. If I couldn't bear to let it go/allow it to be mistreated then keep it by all means and just keep it as a backup or like for travel as you said. You never know, you might grow out of it once you've saved up for the new compy!
However, if you're strong enough, I'd format it and sell the bugger along to your cousin and wait it out for a new shiny compy. Just keep it fixed in your mind how wonderful the new one will be and I'm sure you could do it if you wanted to. :]
But FYI, I've had my dinosaur of a lappie for more than 5 years now. It's painfully slow, outdated, but hell it's been through some stuff with me. And it's still here!
I'm sticking with upgrading it little by little because it's cheaper in the long run. :]
Of course it's completely your choice Pixu. xP