If I were in your position, I'd save up for the Velomine wheelset, a cog and lock-ring. New tires too, I guess, but Panaracer Paselas would look great on that bike and are very cheap. Make sure you have a 3/32 cog and you can keep your old chain. Once you have that, you can (pretty easily) take out the rear wheel, remove the derailers and shifters, put in the new wheel, and cut the chain to length. Keep the brakes and those little fender-ettes and you have yourself a pretty awesome bike.