Thank you everyone for your comments and criticisms, all were welcome because it made me think about my priorities. It also educated me a lot about brakes.

I'm going to clean up the rust on the brakes, replace the pads, ensure that the brakes are mechanically sound, lubricate the cables and replace the nuts with stainless steel ones (good idea!). It sounds like this will provide me with decent braking.

I will take this approach with the rest of the bike: clean, lubricate, adjust and only if necessary, replace.

Thanks again!