If it has steel wheels, I would probably start with wheels and tires. I think a decent set of alloy wheels is always a good investment. Keep the old set to put back on if you decide to sell the bike. Then look toward the drive train. I would check for used parts either at your local bike shop, bike co-op, or local flipper. You never know what someone might have laying around. You could even look for a complete donor bike. If your not looking for top of the line parts, they are all around. I have picked up some nice old bikes for less than a new crank set would cost.