After waiting 40 months for our joint I-751 to be processed, wife filed her N-400 online. 4 months later both the I-751 and N-400 were approved during our combo interview. I would certainly file the N-400 asap if you want to become a US citizen.
Once your extension letter expires, you need to schedule an infopass appt for an ADIT stamp if you need evidence of your status. Be aware that your status, itself, does not expire when the extension letter does.