I have a powerbook w/ 2gigs of ram and final cut 5.0.4. I haven't used it in a long time and I just went to play some of my HDV footage and it drops frames every second. I'm sure that I used to be able to use final cut, I've seen this footage a million times, but it just stopped working. I'm going to try whatever I can think of, but it's not complicated (I open the project and press play) what could have went wrong?

Could be spotlight causing problems. As I understand it, spotlight logs all your documents, even photos and film. In doing so it puts markers or tags on the material causing it to freeze or drop frames.
Spotless might be the thing for you:

http://mac.softpedia.com/progScreenshots/Spotless-Screenshot-9834.html

..perhaps...?