Your bike looks very much like a Bianchi Aquiletta. I wonder if they were made by the same company and re-badged?
The style of those classic folder frames - the one-piece curve forming chain-stays, rack and seat-stays - is timeless. That's a keeper, in my mind.
If the gearing is limiting, you could probably retrofit with an internally geared hub.
EDIT: apparently, they made these is 26" wheel sized too: http://www.fixedgeargallery.com/200...aoloBellino.htm