Hi - I had one of similar vintage and turned it into this:
and very nice it was too.
If you post up the frame number, I can probably tell you the exact year, or look on http://retropeugeot.com
for the original catalogues.
Sounds like you are stuck in the same dilemma that I have had. I have a 1980 PKN10 'Competition' model, one down from the PX10, with a frame too large for me - 64 cm (25 1/4 inches), I am 6 foot and normal (?) dimensions (bike is pictured). The 531 frame has a nice feel to it, quite forgiving of bumps etc, certainly more so than an aluminium etc frame. But if you ride a 2010 steel frame, something like a Thorn, you will notice the difference in stiffness - the modern frames are less 'whippy' and if you really pound the pedals, you will get more of your power to the road on a newer bike - especially an aluminium framed bike.
So the dilemma is: remain a little bit vintage and keep the Peugeot frame with new components or keep the old components and get a newer frame?
The problem with the latter is that until about 1984, Peugeot used all Stronglight chainsets - nice but not as fancy or as efficient as their later Campagnolo and Shimano choices, and Simplex derailleurs - good but not really top-of-the-line in their day even.
Also, you should not have a Helicomatic rear wheel (I think they came in in the mid-1980s) but if you do, they are a pain as you eventually end up changing the hub/wheel as any other freewheel set up won't fit that wheel and the Helicomatic freewheel does not last long - 2000 - 3000 miles in my experience.
The Simplex front and rear changers can be adapted to work with indexed levers etc - even with Shimano flight deck combined brake and gear levers, but still feel a little agricultural. I would say the same for the brakes - Mafac or Weinmanns were great in their day but do not have the feel of modern set ups.
Your bike has been updated a bit as you say but if you don't have the priginal Simplex etc parts, you may well update again to brifters with the latest Shimano mechs etc - they are all pretty cheap (at least compared to the rather over-hyped Campagnolo equipment). Did you get the original mechs, brakes, chainset etc with the bike?
You can see this on LGFs bike - he used Campag Deltas - enclosed brakes, and Campagnolo Mirage etc wheels, Xenon mechs.
So it comes down it probably being better to upgrade the components and keep the old frame if you really like the feel and look of the frame, or get a newer bike!
I ride 20 miles round trip to work every day and I do find that although a modern bike like a Specialized Allez may be faster, the Peugeot (now with a PY10 frame in my size at last after 10 years of stretching over an oversize frame!) is more comfortable on London's lousy surfaces and just 'feels' nicer.
Depends what you want to do etc. If you want to sell the bike or the old components or the frame , and it is around my size, please let me know?
Hope this helps. If you are around Central/North London/West London any time, feel free to drop by and try my PKN/PY10 if you like.