Hmmm...tough question. If the frame "isn't quite right for you"..have you had it fitted to you? Maybe it's just a matter of having your LBS fit the bike to you?
You will likely be able to buy another bike for less than the cost of upgrading all the components, but:
- if the bike can be fit to you, and you like the bike, and the steel frame is good quality and decent condition, upgrading with Deore-level components is easy and relatively cheap to do. I recently rebuilt/restored a steel '84 Kuwahara MTB; the bike shop guys gave me a "you must be nuts" look, yet it turned out to be a great bike. All the new Deore components bolted right on the old frame with no problems: derailleurs, brakes, cranks, BB..the works. It might be worthwhile going that route especially if you can do the work yourself or get a friend to do it free.
( I spent ~$250 or so for components + $50 for tires)
-If the above doesn't work for you, or the bike just can't be it fit to you properly, give her a good tuneup and keep her as a guest/loaner bike. You can probably do that for $50 or so.
Almost anything is possible; I guess you must decide what route is best for your situation. Good luck 
~S.
All vintage, all the time.
Falcon Black Diamond
Gitane Tour de France
Kuwahara Sierra Grande MTB
Bianchi Super Grizzly MTB