Changing to the 7 speed megarange involves redishing and respacing, as well as cold setting the frame.

You'll get the biggest bang for your buck by replacing the freewheel with the Ultra 6 as USAZorro suggests, and changing the front crank (or at least the inner ring). For better hill climbing potential, swap out the existing crank for something like a 48/38 MTB crank and have at it....

John D.