That drive will work fine - any IDE/ATA/PATA/UDMA (basically anything that's not marked SATA) 2.5" drive will work in that iBook,. although I'd avoid 7200 RPM drives due to heat issues.
Earlier G4 iBooks will only recognise up to 120GB, later ones can use larger drives (change from ATA-66 to ATA-100 controller). The cut off point I believe is that those with 128MB non-removable RAM are limited to 120GB, and those with 256MB non-removable RAM can use the larger drives.
Be aware that fitting a new drive in an iBook is not for the faint of heart ;)