relacing those cheap hubs would be a mistake. the world hubs are the least impressive i've seen. and the rear doesn't even have a hollow axle.

if there's a problem with the current wheelset, i'd probably do the least to get the bike back on the road, sell it, and look for a better used bike already complete with a 700c wheelset. it's not the wheels on the world that are holding it back, it's the frameset.

if you need your commuter to look cheap (like the world) for anti-theft reasons, there are plenty of better bikes ready for this task.

do upgrade the rear to a hollow axle with skewer; and do replace the steel bars with aluminum ones. put 1" tires on it, and ride it if it meets your needs.