Personally I'd go for bar-end shifters, they are easier than down-tube, have a friction option so you won't have compatibility problems, and look reasonably retro. They are around 30 quid new.
You can sometimes pick up period Campagnolo ones too, they're not too expensive.
For better brakes - sandpaper the original pads or buy new. You'll notice a big difference.
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ok cool, thanks for all the ideas people... still not sure what I'm gonna do with this but have basically narrowed it down to two options:
1. Keep it retro, get the paintwork restored, source some of the stuff suggested and use it as a proper road bike
2. Turn it into some sort of mutant, matt black, retro-inspired single speed stealth bike for carving up the city at night in the winter when I can't go to the jumps or park.... this seems infinately the more exiting option \m/
Erm well... the only specified condition was that I don't sell it although I think I'd probably run it past him first if I was going to do anything major. He is mellowing a bit in his latter years so he might be ok with it.
Actually the saddle ain't too bad... It's the riding position that sucks!!! It's just so far removed from what I'm used to, I mean I don't really 'sit' on the saddle on my DMR, it's more of a standing up bike... Speaking of that Brooks saddle, it's come up a treat with a bit of elbow grease, the brass bits are now brass coloured again and the leather itself is in amazing condition given it's age
Just out of interest, where would be the best place to get a respray done should I decide to go down the 'original' route, could I get the luggs done the same, and where could I get replica decals done?