They really handle quite well IMHO. The suspension was a little off and people blamed the frame for the harshness, but other than that they were very good. Its hard to know what should be modded without knowing what's already been done to the bike. But I would start by setting the bike up for me, ride it and fix whatever I didn't like. No reason to go replaceing stuff without first riding to see if you find it an issue. The CR250 and 125 have very similar frames (the 250 has better suspension components) and should handel similarly given the amount of additional weight, hp and rotational inertia the 250 has.
For the suspension, I think there are small "compression" springs in the forks. These can be replaced with different ones that will make the forks much more supple over small bumps. I know this is true for my 01CR250R, and belive the 97 used the same forks.
good luck