From the picture, that looks to be in good condition and old steel touring bikes like that make for a comfortable ride and great commuters.

Are you sure it needs a new freewheel? I've found them to be pretty easy to bring back to life with a little oil. A chain can be had for 15 bucks or less, and if you don't have one you'll need a chain tool as well. You might also want to budget a little for new tires ($15-20 each for pretty good ones, as cheap as $6 each for perfectly functional ones), cables and brake pads. (Awesome deal on new cables and brake pads from Nashbar here: http://www.nashbar.com/profile.cfm?c...bcat%3A%20Kits)

I don't know what's under that seat cover, but if it were me a good saddle would be a priority.