My wife has a 26" Medium frame Gary Fisher Sugar 3 that is a sweet ride but we bought it 12 years ago! She rides alot less now but as you can bet the rear and front shocks are shot! The bike is sweet and only weighs 29pounds (no disc though). It has XT components.

Typically she is on easier trails now and no longer races bc of our kids. LBS quotes $700 to rebuild both rear and front shock, replace tires, cassette and chain. They did try steering her towards some new hard tails that were at the same price instead. But these add about 4 more pounds and hard tail.

It's a shame to get rid of this lightweight and great riding bike. Thoughts?

The fork and shock rebuild should be in the neighborhood of $100 each unless they're something more high end than I think a Sugar 3 would have. If you need tires and can change a tire, you can pick up used tires on the forum for next to nothing. I think the bike would be worth that investment as much as you seem to like it. Do you really need the rest with minimal riding? It may take $700 to get it into pristine condition, but do you need that? 

I agree with the previous poster that the bike may not be worth $700, but I think you probably can get it in serviceable shape for much less than that and she can enjoy riding it for quite some time.

I agree with some of the other posts here.  I would either try to find someone to service or rebuild the shock/fork for much cheaper than quoted and see if anyone here has those parts used for sale.  I would bet tires, cassettes and chains can be found easily if you ask around and maybe post on Charlotte Bike Market if you have Facebook.   

I would not buy a new bike from a bike shop at that price range.  Not unless she was a new rider trying out the sport - even then I would lean towards a used bike.  Sounds like your wife used to ride (and race?) a lot.  So a entry level bike is still entry level regardless of current tech.  She may not have the same experience she had with the Sugar at the time.  Just my opinion on that.  But if you sold her bike and invested another $700 towards a "newer" used bike then you are back in the game!

If she is really attached to the bike, you may want to check out mtbsuspension experts about the rebuild for the shocks. See what that can do for you.

Several nice forks on ebay for less than 100, White Bros on Craigslist for 75.  Keep your eyes open, rear shocks often sell for 50 to 100 used, but measure your old shock to make sure you get a correct replacement.  Cassette can be bought new for 30 and up, chain 10 and up.  Tires, any price you want to pay.  If you need help, PM me.  Sounds like you need to keep the cost low until you know if she wants to ride more.