To start with this system is not easy to open and getting to the RAM is a bear! You can easily damage the display if you don't use the correct tools and techniques outlined in the IFIXIT guides. Here is the guide to replace the HD: iMac Intel 21.5" EMC 2638 Hard Drive Replacement and here is the guide for getting to the RAM: iMac Intel 21.5" EMC 2638 RAM Replacement.
You can use any 2.5" SATA SSD in place of your HD. But if you are going down to the RAM, why don't you look for a PCIe blade SSD designed for your system and install it. It will give you much better performance than the HD swap out. As for the thermal sensor this 21.5" models don't use one as the 2.5" laptop drives Apple uses run cooler than the larger 3.5" drives.
The last option here is look at a Thunderbolt2 external RAID drive system which will give you better performance than the HD's SATA III (6.0 Gb/s) interface. Here's one option: ThunderBay 4 mini. This is the direction we went as it was more cost effective.
The max memory this system supports is 16 GB. Just remember the RAM is on the back side of the logic board.