If that's what you want to do and you have the time and money to spend, go ahead and enjoy yourself. Gotta warn you though, unless you've got an overflowing parts bin, or are good scoring deals off ebay odds are it'll cost far more than the upgrades will actually do for you.. The sensible but ever-so-boring approach would be to get some smoother tires, change cables, clean and lube everything until you've figured out what you really need to change.
While your frame might take the 700 wheels you'll have a chore to get the rear brakes to work. Mavic sells an adapter, but it won't hold 'cross-sized tires. There are adapters available to let you use a disc brake at despite your bike haven't got the brackets for them, which is another possible workaround.