Here is my current bike:


I have had it for about a year and really like riding fixed. I have been thinking for the past while that I would really like a new bike but being a student cash is tight. [ps I know I have too much slack on the chain]

The main reasons I want a new bike:

I want a frame that fits, this one is too big.
This bike is a conversion and the brake that came with it worked really poorly so I took it off. I would like a bike where the front brake works well. I bought a new brake off nashbar (105) but it didn't reach the rim of this wheel.
The bike is heavy.
I don't know if I trust the suicide conversion.

So I thought I would save up some money and get a new rig all at once next fall. But, now I am starting to think maybe I can just upgrade part by part. Then I start thinking I should just make do with what I have and save cash

So if I guess I have three choices and need help deciding.

1) Wait it out, get a new bike when I have a lot of money saved up and do it all at once
2) Wait it out, just stick with what I have and be happy
3) Upgrade bit by bit

I was thinking about option 3 today and went to talk to a guy at a local bike shop asked about building up new wheels. I think wheels would be a great place to start (am I right?) although I am not sure if this frame will fit 700c wheels. If I do for a new wheel set I have to pick the hub / rim combo and for rims I think I should go for something worthwhile like mavic open pros and then pick a hub that will deal with weather. I know dura ace hubs are super smooth but I have read here they are not sealed and as such require maintenance which I want to avoid. So I was thinking open pros laced to forumla hubs.

I need help because I am confused. What do the people of the bike forums think I should do. Thanks a lot for the help I have been trying to read this forum for months and getting to know what is what and now I think I know enough to take the next step in terms of bikes.