Well I was hoping to stay with the 4.0. I guess I really was wondering what the difference between the Grand Cherokee and the Cherokee Classic or Sport? I know my Grand Cherokee is pretty loaded and the body is not kinda squared like the Cherokee. Is the Cherokee built tougher (gears)? I know my Grand is loaded with all the options, which I really don't need.
The XJ (Regular, not "Grand") Cherokee is generally simpler, easier/cheaper to modify, and more reliable. Grand Cherokees are more "luxurious" with more electrical accessories, nicer interior, smoother ride, quieter, etc.
One of the primary advantages of the XJ is the much better automatic transmission and manual option (manual early-model Grand Cherokees do exist but are very rare). 4.0L I6 automatic XJs have the Aisin-Warner AW4 which basically the same as the Aisin A340 used in the Toyota 4-Runner, Tacoma/T100, Tundra (01-04), Supra, Lexus SC, LS, etc. This transmission is very durable and known to last well over 200k mi if properly maintained and not abused (they also handle poor maintenance and abuse relatively well, of course that is not recommended). Grand Cherokees with the 4.0L I6 have the much weaker and more failure-prone Chrysler 42RE automatic (except some early '93 models).
Grand Cherokees also tend have more electrical accessories. These electrical accessories while "nice to have" also tend to be failure prone.
With the 4.0L I6 you would be limited to '87-'01 XJ Cherokees and '93-'04 Grand Cherokees. '00-'01 4.0L I6s suffer from the 0331 head issue (head known to crack if overheated, this affects all models).
Here are some additional details:
Jeep Cherokee (XJ) [Wikipedia]
Cherokee stock specs
ZJ ('93-'98) Grand Cherokee:
Jeep Grand Cherokee (ZJ) [Wikipedia]
WJ ('99-'04) Grand Cherokee:
Jeep Grand Cherokee (WJ) [Wikipedia]
The Ultimate WJ Grand Cherokee Buyer's Guide