benscycle has some "generic hi-flange hubs laced to Alex DH22 rims" for 90 bucks plus shipping. Bikeisland and Bicyclehweelwarehouse also have cheap wheelsets that are like 100 bucks a pop. Any of those should work well.

The conversion would definitely be easy to do. You might need new cranks that will run you like 60 bucks for a cheap set. Or you can modify your existing cranks to only have one chainring.

That's a good frame for a converison. you can take off those things holding the rear brake cable on and that would clean the frame up a bit. it looks like it has horizontal dropouts so you should be set. Main things you will need are wheels and possibly new crank. You will also need cog/lockring/chain