[funboy]

So NaOH is reacted with H20 to seperate Na+ from OH-. 
Dissociation absorbs energy to break down the lattice structure
Why does the reaction of NaOH with H20 result in an increase in temperature??

[Borek]

Hydration.

[Yggdrasil]

To expand upon Borek's answer, the energy needed to dissociate the NaCl lattice is lower than the energy released by the newly formed interactions between the ions and the water.

[jennielynn_1980]

What would the new interactions be?  The reaction between OH- ions and water?

[Borek]

Na⁺ and water. Na⁺ is a small cation, water molecules are dipoles.

[jennielynn_1980]

So there is heat released in the dipole reaction between Na+ and and the O- end of the water molecules?  Does the OH- ion also form a dipole reaction with the H+ end of the water?

[Borek]

To some extent. But OH^- and H⁺ are not too stable:

H-O-H + ^-O-H <-> H-O^- + H-O-H


H-O + H⁺ <-> H⁺ + O-H
  |               |
  H               H


Thus it is hard to say they "form a dipole reaction".