davedd,
You can get new brake pads, new cables, new tires, new tubes and a ton of other stuff from Niagara Cycle Works...
http://www.niagaracycle.com/
New tires will run you $12 a pair, Schrader valve tubes $5 a pair, brake pads $2 a pair, cables about $1 each (might be good to have on hand), cable end tips 15 cents each, plus anything else you might want off the website...check out their clearance section, and sort on "price ascending to catch some good deals. S&H is about $10, so it is usually a good idea to try to order everything at once. So, for about the original lowered price of $80 you'll have the bike with all new stuff on it. BTW, whether you spend $50 or $500 ... you wind up needing new tires, brake pads, etc. It takes about 10 days to get the stuff, if you order it, so in the meantime...ride it and enjoy it.
Other points...
Check online for "how to" bicycle maintenance information and video clips (example: Expert Village/eHow.com).
You are always in a better position when you known how to keep up with maintenance and repairs on your own bike, as well as on other stuff.
Oil everything that moves on that bike! If you don't want to service/regrease the bottom bracket...where the crank with the pedals goes into the frame...a really super sweet and easy job on a Varsity (almost laughable compared to the headaches encountered on other bikes), just drip motor oil into it, same with the axles, head tube and all pivot points on the derailleurs and brakes, etc. Just try to keep oil off the sides of the rims where the brake pads grab, which will mess up your ability to stop.
Get some car wax from the Dollar Tree (the concentrated Awesome cleaner they sell for $1 is great for cleaning off grease and dirt) and put some on the paint and chrome. Should give you a little extra protection.
BTW, nice deal on the bike!! Looks great (like new in the pix), and it came with a rear rack!!! You can throw panniers on that rack, or even "U-bolt" a plastic crate onto it.
Everything on that bike is very easy and basic to work on, and the bike is just about indestructable (those rims are super strong, just keep enough air pressure in the tires so you don't dent them on potholes...properly inflated tires will help prevent that, and damage to the sidewalls of the tires themselves) . Just research what you need to do (good to know anyway), and don't super overtighten anything (expecially the anchor bolts the cables are threaded through).
You only need basic tools with this bike...and that's a good thing!
Nice looking bike...
Great deal....