The first engine performance mod I've made to KITT has been a new cat-back exhaust. For what you get in performance, sound and looks, I think new exhaust is money well spent. I bought a Magnaflow muffler from a local performance shop, Motorsport Warehouse (Tucson), because they told me it would increase the power (maybe 7 horsepower) and sound low and mellow but not too loud. I also bought a 3" diameter tip with an angled cut that was welded to the new muffler. When they were installed by Exhaust Works (Tucson), I had them upgrade the factory 1.75" pipe to 2".
This upgrade has been well worth the modest cost of about $250. The car does feel a little bit quicker, and the exhaust note is perfect. It isn't that sharp "bwaaa" that some people like--it's a softer "bwah". The tip also looks great, better than the one I had on before (the other one was a tiny bolt-on, about 2" diameter, from Checker Auto).
You can read up about the Magnaflow mufflers at Magnaflow.com.