That's an excellent bike; I wish I still had mine...
As others have said, the best change you can make is to replace the knobbies with slicks. It makes a huge difference.
I rode that bike when I was car free (including a year I lived in Germany), and it was just excellent. It worked for regular biking; it worked for shopping; it worked for touring. It just worked...
It was easy to accessorize, too - I added slicks, a new seat, a rear rack, fenders, a bottle generator, and lights to mine.