Is there something wrong with the 27" wheels you presumably have? If not, I don't really see a compelling reason to switch to 700c. If you need new wheels anyway, you might as well go to 700c for the greater tire selection. You'll also pick up some fender room, but on that bike I suppose you have plenty already.

Is there a particular reason you want to re-use the freewheel? If it's the original one I'd suggest replacing it anyway, and putting on a new chain at the same time. You can get a modern Sunrace or Shimano freewheel and your shifting will improve significantly.