What do I NEED to do and what SHOULD I do...

[Napalm]

ss lines are not needed and save those paper stacks if you have to.

Site unseen:

I would have your rotors trued, then I would replace the front pads and the rear pads (yes really, rear brakes on the g8 do quite a bit and gripper pads on both should help alot). get almost any pad if you need to scrimp on money. Although I would use carbotechs or something else, but any pad will be an improvement.

THEN: flush the system. Sound to me like you have boiled your fluid atleast once. Get out of there. This is where you enable the help of the penny pinching wife, make her pump the brake pedal when you flush it yourself. saving precious paper stacks. (money for those not affiliated with the ghetto)

[Napalm]

Oh and with money saved, exhaust mod 1. maybe not headers but you could delete the mid muff and rock an X pipe.