I might keep the Calphalon - I have 25-30 pieces in excellent shape, all in their older anodized format without nonstick coating. Copper or stainless might be better, but these work well.
My Henckels/Wüsthof knife set was "borrowed" by my parents. They have also "borrowed" some furniture, my AMT speakers, a favorite cat, among other things. Yes, we get along great and I love them and we get along great, but they have a way of taking what they want.
Anyhow, I might pick up a new Wüsthof or F. Dick set. Though I'm not unhappy with the cheap forged Calphalon knives I have. I picked up a paring knife, chef's, bread, santoku, and steel for $7-$20 each. All the knives are forged and not too bad. Adding a carving knife for $20-$30 might be a cheap way to finish off a set.
I've also been looking at used appliances. Some good quality cooktops, like Wolf and Viking, are turning up for $500-$1,000. The bells and whistles aren't important - I'll avoid anything with circuit boards. I'd add an electric convection oven for roasting/baking.
And yes - the house is a good deal. They're asking $54k, but it should go for a little under $50k cash. It'll take some work, but it'll make sense. No mortgage, no car payment, and about $10k into a solar system will mean almost no utility bills. This could turn out pretty well.