For 1st question, with D200's costing 3 times the value of second hand D70's, is the D200 3 times better ...NO !!! Is it twice as good ...NO !! ..... Is it better, YES, but according to your type of photography, size of prints etc this could be marginal for some people. The handling & functionality of the camera is a fair leap up, with most functions/settings close to hand & therefore quick to change, making it more along the lines of a pro camera for use. I would say for how serious you are with your photography Skip, that it would be a wise investment
2nd question..... so many lenses to choose from, but I would say looking at the types of photography you take the
Nikon 17-55mm f/2.8 would be a lens you would never need to upgrade again. Paired with my D200 it takes stunning quality shots, very close to prime quality. Saying that if you are not worried about have a zoom to cover a range, then a set of primes would always give you ultimate PQ. The Nikon 50mm f/1.8 is a no brainer for the dosh.
Dillema for you is going to be if you have to decide between a decent lens or D200
Logic says the pro lens on the D70 should produce a higher quality image than the kit lens on the D200. Do others agree ?