Looks like they might be in way of clip-ons. Hard to tell how bad from the photo, but maybe the shifters can be moved outward some to make room.
As far as converting to STI.... you'd spend nearly as much on that 'upgrade' as you did for the bike itself. Not worth it. Your money would've been better spent on a used bike that already has 'em. I know your budget isn't that huge, but a new $600 road bike sells for $200-400 on the used market in good condition.