If you can find a level II for a decent price, get it! I've had a 4.0 4x4 4 dr. 01 XLT with a 5 spd. manual and 4.10 axles, and now I have an 03 Level II (4.0, 4 dr. 4x4, 4.10 axles also). The Torsen limited slip is amazing, I don't have to flip 4x4 on to pull the boat out on slippery docks anymore. The added peace of mind with the 31 spline axle is very nice too! Also, if you decide you want to upgrade the rear brakes to disc brakes, the 31 spline axles are much easier and cheaper to convert. The Bilstein shocks have a great ride and make you feel much more 'in control' on uneven terrain. You don't bounce around near as much as you would with the standard 4x4 shocks. The Level II interior is soooo nice too! Anytime I take my truck somewhere (like when I got my speakers installed) I get comments on the interior, and the g/f loves it too
The manual transfer case is a nice piece too for peace of mind. I don't have to worry about any motors going out and keeping me from getting into or out of 4wd. And don't forget about the Alcoa wheels and BFG A/Ts!
All in all, the Level II package is just a GREAT package to get. If you can find one for a good price, definitely jump on it!
With that being said though, my 01 was also a great truck when I had it. Owning a Level II now though, I know what a big difference so many seemingly "small" things can make. It all depends on what you can find. I think you will be pleased with either truck, but the Level II package is DEFINITELY worth looking for!