Like STP explains, the upgrade path is a very long and twisting road. It'll suck your wallet dry and turn your hair gray.But if you have the bank account and the fortitude, it can be an extremely rewarding hobby.
If you don't feel like diving in and doing the big upgrades (wheelset, drivetrain, etc), there are still a couple of small upgrades that will make a noticeable difference (in ride quality, if not necessarily weight savings).
You mention that you enjoy your bike. The fit must be pretty good then.
Try swapping out the stem for one with less Rise. (Front-loading stems allow you to do this without a lot of fuss). This will accomplish a number of things (as long as you don't get too low so as to become uncomfortable). This will put you in a more aggressive position. Power and handling will increase substantially, and you'll be a bit more aerodynamic.
Going from a "riser" bar to a straight bar will also accomplish this to an extent. (Go with an alloy bar to reduce weight). Beware that straight bars generally do not have as much sweep (rearward bend). Just be sure that you remain comfortable.
If your tires aren't ideal for the terrain you ride (be it mud, trails, or pavement), then get a set that are specifically designed for the type of riding you do. Tires can make a huge difference in speed and handling (and may be lighter to boot).
Get yourself a pair of clipless pedals (and of course shoes). This is a somewhat expensive upgrade, but one that you can hang on any future bike you purchase.
(One of the golden rules of upgrading is to try to purchase items that you can put right on a future new bike, or on another upgrade bike project). If you do your upgrading with this in mind, then you'll benefit many times over.
Clipless pedals will increase your power, smooth your cadence, and improve your handling. (Ask anyone who has them, and they'll tell you they'd never go back).
For pure weight savings, swap out your seatpost (or add comfort with a high quality suspension seatpost). Speaking of comfort, how is your saddle? Putting a more comfortable saddle on will increase your riding time. And comfort comes from the shape of the saddle, not necessarily the composition... so a much lighter saddle certainly could also be the more comfortable one. How about padded biking shorts, and gloves?
Have a bike shop retension your wheels to a balanced, more optimum overall tension. This can make them faster, more durable, and increase handling. (I really wouldn't try this yourself yet - even though the only tool you really need is a spoke wrench).
Adjust your drivetrain so that it shifts perfectly (a poorly tuned derailleur can be a real hassle).
Check that your brakes aren't rubbing, and that your pads are positioned correctly.
Make sure your handlebar is perfectly straight (you wouldn't believe how much an off-kilter handlebar can detract from handling/stability).
Rotate your shifters and brake levers so that they are most comfortable. Adjust your brake levers' "reach."
If you want to monkey with the drivetrain, the most cost effective upgrade is the bottom bracket. It involves some special tools, and there are certainly compatibility issues, so I'd recommend your LBS or a very knowledgeable buddy do it. Putting in say a BB-UN72 will eliminate a sizeable chunk of weight, and increase your drivetrain efficiency (those are very good bearings).
If you can afford one big upgrade, then go for a new wheelset. Your money will make the biggest difference there. If you can swing it, get a good enough wheelset that would also be an upgrade when hanging on your future bike! (There is the compatibility issue regarding your current 7-speed vs. a new 8/9-speed hub though). Hmm... a subject for another day.
Well, like STP says, you can certainly pour a lot of money into it (and perhaps some down the drain), but there are still a few little tweaks that you can benefit immediately from.
Good luck, and just remember that the important thing is to just keep riding and loving it.
Sky.
Posted by Skywalker 
on 10/01/01
