Welcome to the forums!
You should fix everything, and I mean EVERYTHING that is wrong w/ the car currently and then go from there. A 98 is going to need all 4 struts, front end work, valve cover gaskets, LIM gaskets if not previously changed to the aluminum versions, rotors/pads as you say, and fluids changed. Once you get a solid base to work with then you can start modding. I know this doesn't sound as fun as putting 18's on it and dropping to a 3.4 pulley but trust me it will work out better in the long run. There's nothing worse than trying to troubleshoot an issue on a car that has not had a good maint. history, and adding speed mods are only going to strain those old parts that much more.
How many miles are on it now?
If you plan on adding a lot more power then I suggest you take a look at tripleedgeperformance.com for the cost of a good tranny as you will need one sooner or later. As far as staying S/C or going turbo, I would go turbo myself but that 5K budget may not quite be enough to do it properly unless you score some used stuff, especially taking into account the cost of replacing other parts beforehand. Keep in mind if you do any mods even on your existing Gen 3 you may end up needing a tune to keep from blowing it up.
Take a read through the "safely modding your 3800" thread and that should give you an idea on what/how to mod your ride. This should be mandatory for anyone looking for more performance. You don't want to know what a chipped piston sounds like, lol...
As far as the struts, take a look at the Brakes/Suspension/Chassis forum for ideas on what struts/springs combos work well together.