A cinderblock foundation can easiliy support multiple stories, but the question you need to ask is what is the width and depth of the footer below the block stemwall. When you apply for a permit to increase the size of the house, and go up to a second story, the permit will be conditioned on an adequate foundation. The cinder block will not be a problem, but you will need to obtain measurements of the footer. This information should be available on the foundation details if blue prints of the house still exists, or a small section of footer can be exposed and examined. Call the local building department to determine what will be required to add a story in that area. Footers can be enlarged, but it is a significant cost item.
Building up or out are approximately equal in cost, and I would tend to see expansion (building out) as less expensive. This is because of the demolition and protective measures needed to build up on existing construction, as compared to the relatively inexpensive foundation addition for building out. Either way, you need a new roof. But since you are looking at this as a purchase, be sure you can execute your plans before you buy. You will either need adequate area on the lot to build out, or an adequate footer on the existing house to build up.