Ciscokid: that's actually Dad's Volvo...
Svferrris: I have the black convertible top with a black standard interior. It's nice, but rather plain. I think the white top would really complement the white interior nicely, but it might be a pain to keep clean. Not sure how dirt-resistant the material on those is.
If you're willing to clean it, I think white on white is pretty nice. I definitely prefer keeping the original interior color, unless it's painful (Ivy Gold, anyone?). The top, however, is more up for grabs.
Either way, I wanna see more pics as you make progress.
The engine is a 289 C Code. That's 2 barrel carb, but the previous owner put in a 4 barrel Holley. If this were 1966, estimated HP would be in the neighborhood of 225. Those have always been stated HP, and are generally considered waaay overrated. Still, the car can move!
BTW, if you ever have any technical Mustang questions, a great forum (also UBBThreads) is vintage-mustang.com - click new forum on the left side. It's a major-league high traffic site, and the folks there really know their stuff. Don't know if you've seen the site, but it's been really helpful for me to ask questions and just read what other people are doing.