I did the same thing to an old but cheap Schwinn World Sport. It's not a great frame and it's a little long in the wheel base for my tastes, but I "invested" in a decent set of wheels and a single speed Sugino crank and kept the other parts for now. I figured if I hated it, I could re-sell the wheels or convert them road hubs. It turns out that I like the fixed gear riding a lot. Now I am scoping for some bull horns and if I can find it, a better frame. I will just move my bits and peices over to a better frame if I find one. I would go for it.

I second Schnee's comment on reading Sheldon - I learned a ton from Sheldon's articles.