If it weren't for the fact that you say your current bike is too small, I'd say, why not just do some maintenance and keep using it. I commute on an old Schwinn and it's slow, heavy, and ugly, but it's fine for distances less than 5 miles or so. Call it resistance training if you'd like. If you're looking for something else, I'd consider a "newer old Schwinn"...maybe a World Sport of 1980's vintage. With your $150 budget I think you'd find plenty of bikes on Craigslist and still have enough left over to upgrade to new tires and get a rack for panniers.

As for lights and reflective gear...yes. Lot's of threads on this.