I agree that at the bottom of the market having potential for the future is a good thing- especially as house prices might fall. However, as a first time buyer, I know that I won't have much money at all left after spending my savings on a deposit and fees- any savings I do have will probably go towards buying essential white goods. So, while in the future I might consider things like improving the kitchen, or doing a loft conversion, I won't have the money to put carpets in straight after I move and might not be able to for a couple of months. It would put me off the house.
The same goes for the kitchen/bathroom. If the kitchen is dated but livable, then that's fine and maybe in a couple of years I will have some money to update it, and if not, I can live with it and maybe decorate cheaply to improve it. If it's actually damaged, then I need to do something about that ASAP when I move in, and I probably won't be able to afford to. For me (I have very long/thick hair), the lack of shower would make the place unlivable, I'd have to put one in. So all these things combined would probably make me look elsewhere, even if it felt like I was getting a lot of house for my money, because the first 6 months- 1 year in the house could be miserable.
I'm sure other people have different views, but I don't think mine are that unusual.
I'm in my late twenties, and lots of people I know have started buying houses/looking into buying. I think we fall into two categories- either people want a "fixer-upper" that they can buy for a significant discount and spend money on doing up in order to get a lot more house for their money, or people want a house they can live in straight away. Because I don't have a lot of capital and don't want to take on more debt as well as the mortgage, I'm in the second category. I don't mind superficial stuff (e.g. woodchip) but I want the house to feel livable as soon as I walk in. Equally, my friends who want a house to do up would probably want a house more in the state yours was when you first bought it. Maybe we're not quite the people you envisage buying it though?
IMO, just as a prospective buyer, I would say, fix the kitchen so that it's not got any damage and is usable straight away. It doesn't have to be flash or all new, just not obviously damaged. I would make sure every room had flooring, but go for potentially cheap options. Then, if you were willing to spend more money, I'd go for the shower. I just think doing these things would mean you had a much wider market of people to target and that will push the price up?
At the moment, if you did nothing, I'm sure someone would buy your house, put I can't picture who they are?