As others have said, a larger rear sprocket will make the bike accelerate quicker but it won't rev out as long so you have to change up quicker. A smaller one will have the opposite effect - the bike will be a bit slower to pick up but it will hold the gear for longer. As Fokker has said already however, you're better off sticking to stock or quite close to it really. Often people may change one or two teeth on the rear according to preference, but don't go way off what stock is would be my tip. 3 teeth on the rear is broadly equivalent to 1 on the front too - most folk always keep the front as standard, and then play around with the back until they get a ratio they like.
Re smoothing it out a bit - for a 60 I'm not so sure. If it was a 250 I'd say Fly Wheel weight, maybe add another base gasket etc but on a 60 I really don't know. One easy one would be to stick a smaller sprocket on the back - but as I said, don't go too much more than 2 or 3 smaller than stock.
Good luck - I raced a KX 60 in 1983!
