The most important thing you can do to upgrade an old bike is to overhaul it. It'll just run so much better, maybe even better than when it was new. The bearing grease can get old and pasty, making the bike seem heavy and sluggish. If you haven't already, you need to:

- remove the wheels and bottom bracket and thoroughly clean and lube all bearings
- remove, clean, and lube the headset
- thoroughly clean and lube the chain and the derailleurs
- replace old shifter and brake cables; adjust the brakes and gears
- replace old brake pads
- true the wheels
- make sure you have a good seat and some nice, new handlebar tape
- make sure you have good tires -- not dry-rotted ones. If you replace the tires, replace the tubes, too.
- clean the frame of dirt and grease, and use Semi-Chrome or a similar product to shine up the wheels, spokes, handlebars, seat post, etc.

There! You've got a new bike! If you don't know how to do these things, check with a local bike shop for an overhaul price.