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For fun, add a locker, 4 inch lift, and some 33's that would be cheap and easy if you sourced some of it used here in the for sale area. Believe it or not, if you have that engine in top tune it will perform quite well, and you can spend money on other stuff like recovery stuff. Look at my pics in my sig , run a very simple setup. I have many trips under my belt when truck was really stock. A locker and good tires will make you fell like a superhero. Your transfer case has a decent low range, and if your running a stock auto trans it has a great first gear. Also add a tranny cooler if your running auto trans. Of course as budget allows always replace things with an upgrade /forums/images/graemlins/k5.gif
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I agree. You might set down sometime, and write down a list of everything you'd like to do to your truck, then start prioritizing (is that a word? /forums/images/graemlins/dunno.gif) the importance of each. Sure a new 350 would be nice (and probably eventually a requirement) but if your riding on stock suspension & street tires, it won't do you much good off-road anyway. Start-out getting the things that offer the most "bang for your $$". Read through some of the old posts (alot of info & pics too) and see if you see anything you might like to do yourself.
Good luck & welcome to CK5! /forums/images/graemlins/thumb.gif