Also depends on the load rating of the tire. 16's will give you more sidewall flex vs the 18's. I've never really noticed any difference between the two, but for off-roading I prefer 16's. On my 99 I'm running a set of BFG KO2 275/65R18's and it rides great.

 

Weird, I just did this today; was gonna offer my thoughts.. took an 18" set of typhoons(I think) off my parts truck to try. Been running 16's for a while. 275/60-18 Continental all seasons. Imediately noticed a harsher ride. Took it out on the highway and instantly noticed better tracking and more responsive steering. My conclusion; a D2 is not a road machine since it has solid axles. It's a truck and needs help absorbing bad road for a better ride. My double-fused spine says so. And I prefer to have more sidewall for the trails too. Gonna stick with 16s. They seem to be cheaper too, even though there's more tire there. Supply and demand..

 

 

Sounds like you are on the right track... As an added note on the suspension, check both the shocks and the springs, if they are OG then you might as well change them all out... Putting new shocks on bad springs will just shorten the life of the shocks and you'll need to buy new shocks again when you do it right.

Decide if you want a stock ride or if you want to go heavier duty and take if from there...

 

I've got 18's in one size larger than stock and I think they are great. I'd go with the 265/60-18's and run them at 30-35psi and the truck should ride great.