SurlyLaika

So I bought my gf an old Univega and it's actually in worse condition than I first thought. The people said they bought old bikes and restore and sell them. There's not a damn thing on the bike that looks like it was recently replaced. Oh well...
I'm now realizing that it's more of a slower townie bike than anything meant for performance, but I'd like her to have a nice bike and she's not quite ready to buy a serious, new bike. So restoring this one on a budget seems like a good idea. Where to begin?

The tires were dried and cracked, so I replaced those. Rides smoother now. Good thing, too, 'cos the guys at REI said it's unsafe to ride a tire in that condition, a tire blow out is likely, when I just thought, "why put a new inner tube in a crappy tire."

The shifting is not very smooth. It seemed to get stuck between gears. I took it to the LBS and the man said that skipping noises are normal because it uses friction shifters. The shifters are Suntour stem shifters, the crankset has 2 chain rings and the rear freewheel has 6 chain rings (?, I read on BF that cassettes begin at 7 gears and up) The LBS said if I want to fix it up, I could replace the freewheel/cassette, the derailleur, and the chain. The chain should just be replaced anyways. I'm pretty sure it's been the same chain on there for the last 20 years. As far as the derailleur, I've read that even modern low end derailleurs perform better than midlevel derailleurs of the past. I could get another 6 spd free wheel/cassette...but if it is possible, I'd like to make it a 7 speed.

Please, break this down into stupid for me and let me slide if I referred to components by the wrong name. Refer me to parts that would be compatible. And finally, will revamping the drive train, changing the tires and pedals really improve the ride of this old bike or is an old bike simply always an old bike?


Thanks for all the help.