Yes, that will work. However, your installed programs (including your OS) wont work properly, because your programs need to be installed. Installed programs, depending on the program, will need to install some things into the directory of your os, which shouldn't be the problem. Almost All programs also get installed into the registry, which tells the computer what programs are installed, and the binary way (or hex?) of where it works, what it runs, etc. So yes, you can copy everything to your newer hdd, but chances are most of your programs wont work.
If you just want more space, why dont you use the 120 as a secondary? I do that, I have my os and programs installed on the master, and my personal data, and program installation files on the secondary. That way if ever need to format, I just format the os drive.