Engine and Transmission
There's no question that the LS-family of engines is the go-to choice for power these days. Usually affordable and always powerful, the LS platform is certainly the way to go if you don't mind spending a few thousand dollars. That's if you want a brand new crate engine or even a high performance junkyard engine. However, if you want LS power with the price of a Gen I small-block Chevy, the '99-up LS-based truck engines are the answer. There are several choices for displacement, but it's common for thrifty enthusiasts to use the LQ9 (6.0-liter), which comes from the Cadillac Escalade or other large GM SUV models. You can find one of these for less than $2,000 in most cases, complete from intake to oil pan with the wiring harness also included.
Another option is to keep it simple with a Gen I small-block build, as it's still the cheapest and simplest engine to build. Big-blocks are also fairly inexpensive if you stay out of the race parts department. With all this in mind, a bone stock 6.0 Vortec engine will make around 350 hp, and a basic small block should do about the same with a mild camshaft and a decent set of iron heads-the biggest difference is the efficiency, as the late-model Vortec engine will get about 10 more mpg than an old school small-block in the same horsepower range. With the small-block, you'll save on the specialized parts needed to swap in a modern engine, like the engine-swap mounts, headers, and oil pan. It's truly a battle of pros and cons, but if your budget will allow, you'll be happier with a fuel-injected LS-style engine.
Paint and Interior
Getting your project running and driving is one thing, but making it look good is also part of the fun. Bodywork isn't for everyone, but if you can do some of the work yourself, it saves a ton of money. Rust is a big issue for cars outside of Southern California and the Sun Belt, and it's impossible to combat the problem without new metal. Luckily, many companies, like Auto Metal Direct, manufacture body panels for a variety of Chevy passenger cars. Paint and bodywork are expensive, but the quality of workmanship is usually a matter of how much you want to spend. If your budget doesn't allow for a decent paint job, just leave it in primer and have fun with it until you save enough cash for the shiny stuff.
Interior is another tough deal, as custom upholstery is expensive, no matter how you go about it. Interior kits, like the ones available from CARS Inc., can restore the interior in your Chevy, and installation is user-friendly, even for a beginner. There's never a disadvantage with simply going back to stock with an interior. However, some folks resort to racing or late model OE seats if they can't find the originals, or if they want a lighter, more functional alternative that doesn't require re-covering. Add a few auxiliary gauges if you need them, install a good shifter, possibly update the stereo, and you have comfortable surroundings with a few nice details thrown in the mix.