Wow, quite a few points to clarify.... I hope I don't miss many
What bike do I have and why I want to upgrade it?
I have a Raleigh Vitese 90/91 7speed and in pretty good condition as it has been stored most of it life but I have been using it regularly for the last two years or so.
Why do I want to upgrade it? Well, I have got so much pleasure out of riding this bike that I just don't want to get rid of it and I don't have enough room for another bike, so I've decided to upgrade it
The bike is as you see it there but it now has a 30 T cassette, spd pedals and a team pro brooks saddle, the rest is all original.
Do I need 9 speed? the answer to that is "not really", as long as I have a big cassette. BUT it is now very hard to find the 30 T cassette or sprockets to replace and this problem is bound to get worst so I thought "I will upgrade and avoid future headaches trying to find parts."
What are my main priorities? STI shifters and a big cassette or maybe a not so big cassette and smaller chairing.
Tools? I have a bike tools box that I have never used and it seems to have most of the tools I will need. The biggest job I have ever done was to replace the cassette

.
Mechanical Knowledge? Very little, but I love a challenge and since I have fun everytime I clean / maintain my bikes I thought "great opportunity to learn while I rebuild myself a new bike"
Budget? The figure I have in mind is £300 but I'm sure I will be told here that is too optimistic
Would I prefer buying a new bike? In all honesty, I have read how enthusiastic and proud of their achievements people post here and I just want some of that

maybe I'll buy a new bike some day as for now I only have room for my wife's bike, my daughter's bike of two of mine!
Thanks for all your help and suggestions.