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i would upgrade rods first. there are a lot of very good rods around $150. a good rod will let you feel more bites which should result in landing more fish. you can get away with reels that are decent for reasons you listed. another thing i would do is sell off all your old stuff you dont want or use. that will give you a little extra money to invest in the new gear. doug
for bass, put your money into the rod firstwith bass you don't have the need for a great drag like if you were fishing for say steelheadbut a better rod will (if chosen correctly) will mean more fish...more hook ups and less lost
I would have to agree with upgrading your rods first. Check ebay for some good deals on rods. I have baught a couple there and am happy with them. You can even find better deals there on reels.