Best ways to upgrade an old bike?

That's a great frame and I wouldn't replace it. You don't say what type of tires you have on it, but a HUGE change for me on my Montague Paratrooper was to ditch the knobby tires and put thin Specialized Armadillos on it. First of all, my rolling resistance went WAY down so rides were more fun and efficient. Second, I stopped getting flats which really made biking a lot more fun.

I'm a bike mechanic. I've worked on about 3 old Stump Jumpers in the last couple of weeks. Those were very popular in the mid 90s, and all 3 that I saw recently were still in fairly good condition. There's no compelling reason to get a new bike unless you just want to, but an old Stump Jumper makes a perfect beater/commuter. Tires: get something with as little tread as possible. Specialized Armadillos, Vittoria Randonneur Cross, Michelin City, Michelin Country Rock, Serfas Drifter. Those are all great tires for what you're doing. Shifters/Derailleurs: if they're anything but smooth, this would almost certainly be improved with new cables and housing. When a mechanic replaces your cables and housing, they'll also have to adjust your derailleurs, and this should go a very long way towards nice shifting. If a new chain, cassette/freewheel (the gears in the back), and chain rings (the gears in the front) are needed, then tell the mechanic to replace those for you as well. Chains are consumable parts, and if a chain is really worn out, it's often best to replace the cassette as well. The chain rings wear, but not as quickly as the cassette, but they'll need to eventually be replaced. Front Shock: I'd say live with it. You don't really need suspension. If you want to get suspension back, then talk with your mechanic about what fork would be a good fit for your riding, or you could buy a rigid fork and save a little money. If you don't already have a rack installed, consider it. Using a rack and panniers, to me, is much more convenient and comfortable than riding with a pack. I personally don't use fenders, I just live with getting wet, but fenders will keep you clean and dry(er) when the weather is wet.

Are you sure the problem with the front fork can't be merely fixed by someone who knows how to adjust suspensions? Likewise, it's possible someone can improve your deraulleurs. With some practice you can learn to adjust them to be smoother also. But you may need/want new ones. What kind of tires do you have on it? For commuting you want something reasonably skinny, that can be inflated to higher pressures, with little to no tread on it. For winter you may want something like snow tires, don't know what it's like where you are (there's no snow or ice where I live, I know nothing about that) For commuting you might really enjoy fenders - they will keep shit off you (water, mud, gravel) and will also prolong the life of some components. A lot of people really love Brooks saddles. Don't know if that would be appropriate for you but they are very well made, very nice, and kind of expensive.

This wasn't listed as part of the equipment you're thinking of upgrading, but does answer your "what would you add?" component. I would add - if you haven't already - a rack and a set of panniers to your setup. I love, love, love having mine. I used a backpack for a few weeks and hated having a sweaty back when I got to work. I also found that having them made it easier to balance the load - it's closer to the ground and the bike's center of gravity. I got mine through Bike Nashbar, but there are plenty of decent sets around.

I don't know about your specific bike, but I got a few extras on a newer bicycle last year and I wish I'd had them before: - mudguards (I suppose that's what everyone above is calling "fenders"?) - a chain guard (no more rolling up my trouser leg or using bicycle clips) - a good rack and basket (no sweaty back from having backpack on while riding, and/or it doubles the amount of stuff I can carry because I can fill the basket AND a backpack) - dynamo lights (no more going without lights for a few weeks at the start of each winter because I forgot to replace batteries). You can even get auto-darkness detection dynamo lights nowadays so you never forget to switch them on! - I've filled my tyres with goo (a sealant) that seals up small holes automatically so I don't have to stop and repair small punctures. And I've got decent tyres (like $50 each instead of $15) that I keep well pumped up, and I basically never get punctures any more at all. - reflective tape around my wheels so I can be easily seen from the side. Also, every time my gears get even a little bit clicky, I get them adjusted (I am bad at doing it myself). Same with lubing my chain, although I don't need to much anymore with the chain guard. But keep everything running silky smooth and you'll notice the difference.

That's a pretty nice bike. Those derailleurs are fairly high end - they probably just need adjustment. Seconding smooth tires. Replacing knobby tires is the easiest way to get 5mph faster.

2nthing slick tires. Knobby tires have no value on pavement whatsoever. An upgrade to thinner, lighter rims would also be a noticeable improvement. You say your shifting is clunky. When is the last time the shifters and derailleurs got an overhaul? There's not much you can do with the shifters, but the derailleurs, cables and cable housing can be cleaned and greased. Replace the cables and housing if they're rusty. Keep your chain clean too; that will help a lot with shifting.

I commuted for nearly 10 years - 6 miles each way - on a Specialized Hardrock. My major change was skinny tires, which I did a long time ago. I also covered it in luminous material so it could be seen side on and was less attractive to steal. It served me extremely well, as your bike has done for you. When I moved to my new purpose-made hybrid road bike, I also went with clip in SPD pedals. It took me a long time to get used to them, but it was worth it. I would recommend that change. I'd also consider just buying a decent secondhand fork with no suspension. And I'd get a decent saddle. The ones those old Specialized bikes came with were fine, but no great shakes.

I'd put on slicks, replace your heavy front fork with a lighter fixed fork, and consider getting lighter wheels that are still strong enough for city riding, in that order. The wheels are only last because they cost so damn much. Lighter wheels/better tires are going to get you the most improved road feel and commute.