ddk, it sounds like you've basically been happy with the bike and gotten good use out of it. Given that, what are you looking to achieve by "upgrading" it? What specifically bothers you about the current setup?

As for keeping it performing well, here are some ideas:

Drivetrain:

• Replace the chain when it starts to show some "stretch" rather than when it's really worn. This will help the crankset and rear cogs (the more expensive parts) last longer.
• Your crankset probably has riveted-in-place gears, so when the gears eventually wear out, you'll have to buy a new crankset to replace it. Crankset and BB have to fit together properly, so that will be the time to decide if you want to go with a different type of BB as well.
• Make sure your rear derailleur hanger is properly aligned so its plane is parallel to that of the wheel. I had a similar dept store bike that the store couldn't get to shift quite right -- the RD hanger was slightly bent and aligning it properly finally allowed the RD to be properly adjusted.

Wheels/Tires:

• dabac is right about having the wheel(s) checked
• wheels are where manufacturers can cut costs in non-obvious ways.
• a quality set of wheels will last you a while (until the braking strips get worn down) and can be moved to another bike if/when you switch bikes.
• Look for aluminum rims, stainless steel spokes, brass spoke nipples, and Shimano cup/cone bearing hubs.
• On the rear, look for a freehub design rather than a freewheel design.
• Since tires are where the rubber meets the road, tire design, construction and inflation can really affect your ride and handling -- investigate and experiment.

Brakes: V brakes (what you have) are cheap and effective. However, pad material can make a big difference. Pick up some KoolStop salmon pads for your brakes.