Think about it this way...
if you had a 31" tire that makes 1 rotation how far does it go? well 31x3.14(PIE)= 97.34" on the road
Now switch to a 35" tire, 35x3.14= 109.9"
now with 38's - 38x3.14= 119.32"
SO, if you are running a 3.73 gear and a 31" tire at 65MPH in overdrive your running 1839.5RPM, if you move up to a 35" tire going 65MPH (actual not whats showing on the gauge) in overdrive still you'd be running 1629.3RPM. See how the same speed, same gears and larger tires drops you out of the power band of the motor. NOW, this is assuming you can run in overdrive at 1629.3RPM which your tranny would not be happy about.
Most people have come to relize that a 35" tire and an overdrive transmission (700r4) basically requires a 4.56 gear. Then from there I would say as the tire size steps up the gear would also. SO with an overdrive tranny running a; 35" tire you need 4.56 gears, 36-37 needs 4.88's, 38 up to about 42 needs a 5.13 gear. Working backward 33" tire at about a 4.10, 32 likes a 3.73 and a 30-31 run 3.08's pretty well. By changing the gear with the tire size you are attempting to keep you vehicle in its power band.
Hope that helps, I've read many things on here and talked to several people, this is what I have taken from it while planning my tire/gear combo with 350TBI/700R4 setups. I'm getting ready to regear my DD to 4.56's with 35's and my project truck will get about a 38 or maybe a little larger tire and 5.13's! /forums/images/graemlins/waytogo.gif
NOW, for those running a non-overdrive tranny you drop everything back one, so you use a 4.10 with a 35" tire and so one. I'm not UP on the Manual stuff yet but I guess its drops back yet another gear for granny? /forums/images/graemlins/thinking.gif /forums/images/graemlins/dunno.gif