it really does all come to preference and use. $700 can buy you a trek 1.1 with 8spd shimano 2300 sti. personally, i would much rather have ultegra 9spd with dura ace downtubes. i would use part of the money saved for drop bars and road levers and the rest for riding clothes and equipment (tool kit/pump/tubes/clothes)

if you plan to race then spending more at a local bike shop will be your best option.

the cassette just looks dirty, not rusty.