I was in the same situation.
The bike you have is not a bad bike at all. It doesn't have pro components, but they are decent, and will take a good beating. A while back when i got back into MTB riding. I bought a 07 Gary Fisher Wahoo "no disc" and Alivio components. I must say the bike rocked, and I beat the hell out of it. I also weigh 240, if that tells you anything about how well it held up. Anyways i was in the same boat as you, I wanted to upgrade and make it nicer, after pricing what it would cost to get a new fork, disc hubs, disc brakes, and new derailer's. It was just a little less to buy a nicer bike, and thus I did. Allthough, I will admit before doing so, I did upgrade my front and rear derailer's to Deore, but I found them used on craigs list cheap. So if you can find used parts cheap, go for it,if not,buy a new bike.