1) Start with all new cables and housings - it's cheap and effective for taming most minor shifting problems.
2) Check the derailleur hanger to make sure it's not bent. Check that the cassette is firmly seated and tightened down on the hub body. Check the cassette and chainrings for missing/bent/broken/worn teeth - replace if needed.
3) If you need to replace anything on step 2, replace the chain as well.
Upgrading the brakes to disc may be sexy, but it's not a cost effective change as you may not have have disc tabs on the frame or fork and even if you do, you'll need new wheels with disc hubs. Unless you know what you're doing and are a savvy E-Bayer, the whole thing could run you several 100 dollars per wheel.
Fork upgrades are nice but they're spendy and can alter your bike's geometry or even void the frame warranty. Usually when you start talking about fork and wheel upgrades, you're better off just buying something more modern.
Cadillac Pathway TC & NMMBA Treasurer
2012 Trail Work Hours = 12
Stupidity SHOULD be painful!!
29er=222.9, SS=7.86, Commuter=96.6, Geared=0, Jekyll=25.5, Super V=41.4, Roadie=0