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Do what makes you happy. What i might think is great you might hate. I would start with getting it mechanically sound. I would stick with the 305 if it works. If replacing it i would personally get an LS (5.3 or 5.7). If you like to drive fast think about disc brakes for the back. Figure out what the rear end gears are, if you don't do much highway driving a bigger (higher numerically) gear will get you easy performance. Don't overlook replacing the stock bushings under the cab with urethane ones and getting new shocks. Maybe new springs too, you will be surprised at how much better it rides. Another cheap fix is to replace the carpet and while you are at it put some modern (Dynamat is one example) sound deadening on the floor. This will really improve your enjoyment of the truck if you spend much time in it. Lots of ideas on here, find the ones you like and give it a try!