I'd swap out the saddle and put a rack and fenders on it. Maybe go w/ clips & straps or commuter one-sided SPD pedals. Blinkies, locks, etc. and superglue ball bearings into all the hex bolt heads to keep the parts from walking. Lock the saddle down w/ old bike chain, etc. I wouldn't worry too much about upgrades since it'll be the everyday bike and no matter what bling you put on it, it'll eventually wear out.