all joking aside, I wouldn't upgrade any parts on that bike unless you NEED to replace something and its cost effective. That is a very cheap bike (and I don't mean your free price) and its not financially advisable to put money into it.
For a wheel I would look on craigslist for something in the $20 range if it needs to be replaced. and what do you mean the hub is coming loose? the bolts keeping it on the fork are backing out? or are the spokes loose?
It would be more cost effective for you to save up and buy a new bike even though you got this for free. A bottom end wheelset is going to cost you around $150 and you can get a new bike for around $300.