Basically you have an awning type window. The center bar can be removed and new window sash replacements made.
Personally, I would go with a full replacement, larger window in hieght and do some upgrading. It is a DIY project and will end up much nicer and usable.
You will need to insulate around the window frame, this means removing the interior trim to get at the area. The amount of time to fidle with it and order special wood windows will be about as much as buying a stock window which is larger.
Good luck, think it over, we'll be around.