I had the same dilemma a few years back and opted for a new bike. My budget was quite a bit higher, and it was still not much more money to buy a new bike than to totally refit the old frame (parts only, doing all the labor myself except for getting the rear triangle cold-set to accommodate a 10-speed cassette hub). Then of course there's the hassle factor, all that work instead of just going to the LBS and plunking down my debit card...

There's the regret factor though, that you can't really put a price tag on. I feel bad about not riding my old bike. One of these days I will get that thing back on the road.