Freddy is one the money with the upper end rebuild advice. While you are at it, check the shaft seals on the crank and for cracks in the carburetor boot. While the crown of the piston looks like the engine has been running rich, the damage to the skirt and pitting on the piston surface look like damage from being run too lean. Leaking crank seals and/or a cracked carb boot can cause this and make proper jetting impossible. Burned one down for exactly these reasons with similar looking damage.