Originally Posted by
noglider
This is not a high end bike, and your money would be better spent elsewhere. However, if you want to get use out of the bike, you can do so much more inexpensively. Replace whatever needs replacement and keep the rest. If the wheels are still in good shape, get two new tires.
Numerically, there is no difference between 1.25 and 1-1/4, but there is an important implication of a difference because of the wacky way the bike tire industry uses numbers to indicate size. Always refer to these tires in a fractional value, not a decimal one.
The only thing the slightest bit bad about 27 x 1-1/4" tires is that the variety of tires available is a bit narrow. But there are still good tires available in this size, and if you want to use this bike for commuting, the available tires will suit you well.
The gearing should work as is. I think it is misguided to think of upgrading. Even the brake levers are fine if you adjust them properly.
+ 1. Save your money for N + 1. This bike will work fine as a commuter. The OP's concern about slowing down with this bike is a bit misplaced. The bike is no faster or slower than the rider esp. when commuting in the flatlands of New Orleans. In any case, what matters are the calories burned not the speed one is riding and STIs or an 8 spd set up will burn cash not calories.