Several years ago, after not having ridden a bicycle in 20 years, my mother-in-law gave me her old Trek 800. I had it tuned up and started riding a little, in hopes of doing some family rides. Well it took longer than expected to get the kids interested in riding on 2 wheels, so the family riding only started happening this spring. In the meantime, I added a rack, a better saddle and smooth tires and used the bike for errand running and some light grocery-getting.
So now my daughter keeps bugging me to go on rides with her (she's 9 and just got a Raleigh Eva and is in love with it, after having only hand-me-down Walmart bikes in the past) and it's clear that my bike is old. The handlebars aren't totally comfortable for my puny wrists, and the rear sprocket is showing signs of significant wear. The shifting isn't always as smooth as I'd like it.
So I have two options: replace the sprockets and chain, and consider swapping out the handlebars for something more comfortable, or buy a new bike. I'm torn. I'm usually one for fixing things rather than always just running and replacing with something shiny and new, but I ride a Specialized Vita the other day and really liked it. At the LBS I like, they have it for $470. We have the money, but I hate spending it-- I'm ridiculously frugal most of the time. In your opinion, what should I do? Fix the old reliable bike, or buy the shiny new one?