clipless pedals are, i'd say, the easiest way to achieve a performance improvement.

road pedals use large plastic cleats that are hard and uncomfortable to walk in. mountain pedals use small metal cleats - mountain shoes have tread that protect the small cleat from direct contact with the ground. these are easier to walk in. many mountain-compatible shoes also look very casual, but there are also very techy looking MTB shoes.

clipless pedals work with a spring mechanism. the cleat is bolted to your shoe. you tuck the nose of the cleat into the pedal, and then push down. the pedal - with spring mechanism - grabs on to the tail of the cleat.

time atacs are great pedals and will cost you, oh, forty or fifty dollars. i ride times on several bikes (my every day bike, my road bike for city use, and formerly my track bike).

for shoes, definitely go to a shop and try some on. you want snug, comfortable shoes. and you want shoes that look like what you want them to look like. if you want to look like a biker every time you ride, get fancy tech-y looking shoes. if you want shoes that can offer a more casual look, get casual or touring shoes.

johnny nemo's comment of clips and straps being more "practical" for every day use is really subjective. i ride about thirty miles a day, frequently more. i can't stand clips and straps, because they feel sloppy and uncomfortable. even with all the nonbike stuff i do, my clipless shoes are comfortable enough to wear. or i just throw some light sneakers into my bag. i'm more interested in being comfortable on the bike, since i put in a lot of time in the saddle.