I wouldn't call that bike a heap. Old Fujis are pretty highly regarded as far as old budget bikes go. Those are probably Nitto bars and stem, Dia-Compe brakes, Sugino cranks, and a Suntour drive-train - all quality stuff. Plus, Fuji frames look classy.

As for finding you gear, why don't you ride around and see which configuration best suites your area, and the style of riding you do? So if you can ride it comfortably at 42/16, then make that your gear configuration.