Originally Posted by FastJake

Here's my two cents (because I'm really cheap):

First I'd get a Megarange 7-speed freewheel. I'm quite happy with the one on my mountain bike. The 34T acts as your granny gear, a substitute for a triple if you will. If the gearing isn't sufficiently low after that, I'd get a smaller chainring up front. As small as you can fit on the crank. I suspect those changes will give you all the range you need. 35/34 is quite a bit lower than your current lowest gear of 42/28

Finally, your bike is worth upgrading if you like it. Don't let anyone tell you different.