Hello delaine:
NJ is one of those states that either doesn't have landlord tenant laws or they're trying to hide them. I don't know which. Nonetheless, we can't find 'em.
However, if we did find them, I doubt whether we'd find a specific provision covering this issue. I frankly, don't think it's a "habitability" issue. Warn carpet does not make a home inhabitbitable.

Originally Posted by
delaine
Is the present owner responsible for replacing the carpet or pulling it up and re-doing the wood floor underneath it?
For sure, we won’t find a provision requiring the landlord to do that. Indeed, if it's NOT a habitability issue, then I don’t think he's required to do anything. Buildings get old. Landlords don’t modernize and there’s no law requiring them to. Seedy, although undesirable, is not inhabitable.
Given that I don't think you have legal recourse, that doesn't mean that I think you should give up. Write them a letter. Tell them exactly what you've told us, plus add that they really don't want to lose a good tenant such as yourself.
excon