I'd throw $ at the Schwinn. I don't know what's wrong w/ it so I can't say for sure. But, for example, maybe you could throw a new purpose built rear wheel. Or maybe some of your bearings could use an overhaul, suspension forks, better brakes etc. $200 would go quite a long way to bringing your Schwinn around.
My feeling on dept store bikes is that they're designed to be disposable. They're barely adequite as bicycles, let alone motorbicycles. However the Schwinn cruiser frame (windwood, jaguar etc. they are the same) is a strong frame and a good platform. Much of the periferies are ok h'bars, stem, fork (though susp. is nice).
Upgraded wheels (w/ some type of non rubber donut sprocket mount), upgraded brake(s) (w/ pads or shoes that aren't bathing in grease), good chain (track chain or BMX freestyle) and drive train bits, a new $20 Japanese headset, a nice seat etc. These are all things that will greatly effect one of these cruisers for the better. They also improve these bikes to a riding standard higher than what your thinking of replacing it w/.
Again I don't know the extent of your Schwinn's problems and people on this forum and elsewhere have made good looking, seemingly reliable mb's out of the Cranbrook and Macargi (I too have read bad stuff about Macargis though). I just think that so many useful bikes get thrown away and replaced w/ more cheap bikes that will be thrown away. IMHO
Some cons of coaster brakes:
When coaster brakes fail (usually the result of chain breakage or derailment) they fail suddenly and completely.
Coaster brakes are prone to overheating and fading when used in mountainous areas.
Too many bikes are equipped with only a coaster brake, so there's no back-up system available in the event of brake failure.
To be safe, any bicycle needs a front brake and some sort of secondary backup braking system.
for the complete pros and cons of coaster brakes
Bicycle Coaster Brakes
I hope this is helpful!