Put as much RAM as you can in that poor little guy. That's really the best advice I can give you. Don't spend any money on it, though. A 486 really isn't worth the effort. Storagewise, the newer and the bigger, the faster your PC will be. Most 486s hit a BIOS-enforced wall at 500MB or so. Unless you move to a 16-bit ISA SCSI-2 card and a SCSI drive (2GB 7200rpm SCSI2 drives cost about $10), or you can find an enhanced IDE controller for your machine, your only choice is something like WD's EZBios, which probably makes all the other techies here cringe.
Does your 486 have any PCI slots? 72-pin memory?
Realistically, the best advice I can give you is to save up $100 or so for a 300MHz lease-return machine. Those are readily available on ebay. Even $10 might get you a pentium motherboard and processor from anyone who has one laying around (heck, I gave all mine away). Comb ebay. You might be able to find something that's substantially better than what you have for $20 or $30.
What's going to hold you back the most is that you've probably got an AT-style case. "Fast" hardware for AT style cases is in the process of being hunted to extinction and costs far more than it's really worth. You'd have a lot better pickings if you could get an ATX case someplace.
Software-wise, I can't suggest anything but Windows 95 (if you can shoehorn 16MB RAM in your little buddy). Win95 is do-able on as little as 4MB, but its "sweet spot" for RAM is 32MB, and at the 4- or 8MB point, it's really not pleasant. Disk space concerns will likely prevent any version of MS Office but the 95 version from being installed
You could also build a serviceable Linux box on a 4MB 486, if you aren't all hung up on useless crap like graphics.
If you're really interested in a challenge, you could try making a functional DOS-based PC out of your guy. It'd be a lot of work, but all the programs folks expect a computer to have are out there, including web browsers (arachne) and email software (pegasus mail).