I don't know which direction to go: tub is rusting so either need to get it out and new one put in or get one of those bath fitter type of acrylic bathtub insert over old one. The walls are tiled and in perfect shape. Hate to spend extra money if I don't have to.

A new tub is much better than an acrylic tub but cost will be an issue. You could paint the tub for about $25. http://www.rustoleum.com/cbgimages/documents/243538_SP_32oz_TubTile_Refreshing_Kit_Label.pdf.pd f