This is my current bike. I got it because I wanted a real LBS bike, and it was on sale (30% off) back in '08. It's a blast to ride, but it lacks in a couple of areas that I'm hoping to remedy with a new bike.

The first one is that of heel strike. The shortish chainstays in combination with the 26" wheels and my rack is not a good thing. If I wanted to roll with anything else than panniers, this point would be mute. Even if the new bike had the same CS length, I'm hoping that taller 700C wheels might give me just enough clearance, but dunno for sure.

The second issue is the gearing. There are times that I feel like I could go faster, but the drivetrain is holding me back. I've got hills around here, so I do want to have a decent gear range, but I don't think that I need the mountain goat gearing.

Beyond that, everything else is up in the air, save for: Budget- another entry level bike, no drop bars, and prefer not to use presta valves on the tubes.

Having the right rack for the job seems more like the issue at hand. This is not a big deal to remedy. Change your cassette to a more street oriented gearing.

Well, by the time I pony up the $ for another rack, say like the Jandd Expedition (which may or may not solve the issue) and pay the LBS to swap out the gears (I'm thinking the front chain rings, not the rear cassette), I'm probably at least half way to the purchase of a new bike that already has the 'fixes' incorporated.