I had a Mobile Me account. I didn't upgrade to Lion (from Snow Leopard) but had a message saying that I would still be able to use my email.
My Mail has now stopped receiving from the .me account but still sends ok.
Should I have changed some settings?

See if this Mobile Me FAQ answers your question.

Your MobileMe account has been converted to a free iCloud account using your original MobileMe userid and password. If you were using Lion there is an iCloud preference pane that would have automatically redirected your email when you activated iCloud but in older versions of OS X there is no such automatic option. For the official setup instructions go here.

NOTE: if you have been using your MobilMe account as POP you will have to switch to using it as IMAP because iCloud no longer supports POP mail.

so Apple just converted my account for me apparently.

I have a mbp 10.6.8 and an iphone ios 4. The ONLY features I use are calendar and addressbook syncing between my laptop and my iphone. (which is used as an ipod)

So, my syncing has now stopped. Alternatives? Or am I going to have to get a new phone (as this one probably will choke on ios 5) and upgrade my laptop to lion, or is there some other way to make them sync the addressbook and calendar?

It would not be automatic or as transparent as MobileMe, but you could try Dropbox. It seems to be working for me on a couple of applications/apps that are not conversant with iCloud, but I don't have enough experience with it yet to know all/any of the "gotchas" that may/may not be buried in there.

This article on Pocket-Lint is a nice comparison of iCloud, Google, Dropbox, Amazon and Microsoft storage systems.

it just occurs to me I can just go old-skool and disable cloud syncing entirely and just use the good ol' sync cable...

Yes. To continue accessing what was your Mobile Me account on Snow Leopard, you need to delete the MobileMe account from Mail and re-create it as an IMAP account. You will not lose any of your mail when you do this.

You may need to hold down option when creating the account, to prevent Snow Leopard's mail from recognizing the .me or .mac address and forcing it to be a MobileMe account. (Mail asks for your email address first, and then asks what kind of account to create. It normally won't ask for account type if it recognizes the address as MobileMe or GMail. Snow Leopard's Mail doesn't know yet that MobileMe is no more, hence the need for holding down the option key at the right time.)