First of all, upgrading an A1200 can be quite an addictive hobby, so watch up!
The most usefull upgrade would be an IDE-interface and OS3.9. This will bring you access to big HD´s and CD-rom, which is most usefull.
One drawback here is that OS3.9 needs more memory than an unupgraded a1200 has, so you will also need an accelerator card. 68030-based cards are really cheap, and could make a good upgrade, and would let you play most old games from HD.
If you wan´t to play MP3 and watch video, you´ll need a much faster processor like 68060 or PPC. These processors are fast, but cannot use there full potential without a graphics card.
If you´ll go for a PPC based card, a BlizzardVisionPPC would be a good choice, and no matter what a PCI-based solution like mediator+graphics card would give you quite a nice workbench.
Prices for all these?
I´ve got my IDE-interface from:
Power Computing, and bundled it with OS3.9+3.1 Rom chips. Around 50£
I´ve got PPC accelerator + BVision gfx card used from
Amibench. Around 200£
With all these peripherals you´ll also need a better power supply. Around 20£.
That´s it, happy upgrading!