I started with a 2.5" Rusty's which is no where near big enough for 40's, but I am running a 4" superlift now with another inch of body lift. Honoestly, it's way to much for the 35's, but I figured I'd end up with a bigger setup eventually anyway. If I were looking to run 40's, I could probably pull it off with flat fenders in my current setup. (lots of guys have) Keeps your center of gravity a little lower, although with the fat, wide 4 door I really haven't ever felt that crappy yet. Realistically, if you want to pull 40's right you probably want a 6" kit.
As far as ride goes... you will find pretty much two variants out there on the JK - a four arm setup (Teraflex, Poly, full traction) and some three-link kits. (Rubicon Express, Rock Krawler, and others that have slipped my mind now) I have driven a TF, Poly, and RE setup on-road and didn't really draw a conclusion on favorites, although I have kind of kicked around the Poly setup for a while. The RK is supposed to have a lot of flex offroad, but not quite as much manners onroad.
It isn't on 40's, but you may take a gander at swimmer or my JK at the next meeting. I'm running Superlift short arms on mine, and I believe Steve is as short arm as well. Really with a JK, you can do a 4" lift on adjustable short arms without having a bad ride, although I have to admit that if the money tree ever got ripe I might consider a long arm setup.
If you want to look, there are a couple of JK boards that are full of guys who like to blow smoke about what lift is best. JK-forum.com is heavily moderated, but you can get some feel for what is out there. Just be careful about the brand bias. JKOwners.com is a child site of Pirate4x4 and more vendor neutral, but has its own biases.
