Change/buy new calipers. Stamped steel calipers were often used back then, esp on dept store bikes, and flexed a bit too much. Even the most inexpensive single or dual pivot calipers (buy these, easier to center/adjust and better braking) that are available today are light years better and provide more than enough clamping force. If you buy new calipers, the braking performance should be on par with your v-brake equipped bikes. Nutted calipers are still available, but recessed nut calipers are more numerous and you may need to buy 2 fronts and drill a larger hole in the back of your fork to accept the recessed nut. In the rear, the longer bolt will allow you to use a nut for mounting/securing the caliper to the bracket.

As far as steel rims (although they last an outrageous amount of time under normal use), it is better/highly recommended to upgrade to aluminum rims for all season/condition performance and/or reliable/predictable braking when you need it in wet conditions. Plus aluminum rims are hooked rims which allows higher air pressure and superior tire retention. But if you aren't going to use that bike in wet conditions, then IMHO, I wouldn't bother with the extra expense. Salmon brake pads, black/salmon combo pads, or soft black brake pads are good enough. Just remember to "pump your brakes" if you do encounter any wet sections/conditions...wet steel rims are like an old school car with all drum brakes and asbestos brake linings in the rain, need to pump the brakes to dry them off or you won't stop.