Just got back from a ride and noted a couple of small paint chips with rust forming on my Bianchi Castro Valley. Should I be concerned? Just sand and apply some touch up paint? Any particular paint I should use?

Just use a fine grade of emery paper to take the rust off and make the metal shine then apply touch up paint, either Testors model paint or fingernail polish to match. Get a very small paint brush and put on several coats of very light brushings, allowing each coat to dry...OR, get a small can of Testors spray paint and mask off the frame (so as not to get paint anywhere you don't want it) leaving only the bare spot exposed and spray several quick passes of very thin layers and allow each pass or coat to dry before applying the next. Using spray is tricky on round tubing, so you may want to go to a hardware store and buy some cheap metal tubing about the same size as the frame your going to paint and practice on that first.