I was never a fan of twist shifters, so I'd upgrade that to a rapid fire style that you see on most mountain bikes.
I'd also go with Shimano LX derailleurs (or the nicer XT if you want to spend more money). Shifting performance will be a lot better.
Nicer/lighter wheels will be a nice upgrade too. Tires? I don't know what you have on there now...
Just my 2 cents--