Ditto on the fork. I just replaced my front fork with this one from Nashbar for $50 a few weeks ago, has been great so far:
http://www.nashbar.com/bikes/Product...28_-1___202440
Check the link in my sig for pics of installation. I would highly advise your LBS to install the star nut and also transfer the bottom headset bearing between forks, if you want to do the rest of the install yourself.
I would also recommend some 26x ~1.5" smooth tread tires if you plan on staying mostly on the road.
Before I got the fork I did this to keep my blown suspension from compressing all the way
