I have the 258 in the J20 and it is indeed a bit sluggish. However the 258 is a great off road engine and has lots of low down torque to get out of muddy holes. With 4.88:1 gears on 33s the 116hp is OK.
If your basic engine is in good shape you could look at the ignition and carburation, really just to release horses which are penned up in worn out parts.
A 1972 would have points and a cansiter coil and small cap distributor. These can be swapped out for something a bit stronger which will give a consistent spark. I favour a 1979 up Motorcraft distributor with electronic pickup, fairly cheap reman unit, the Teamrush distributor cap and rotor and leads from a Ford 300CI 6 cylider of the early 80s and something for the ICM, probably a module out of a GM HEI unit and lastly a later E-core coil. This may make quite a difference, mainly because you are replacing old worn out parts. This will all cost around $100.
Carburation I would try and find the 1983 up alloy manifold for the 2 barrel from a CJ. They are lighter and better shaped and come with a manifold heater for cold weather. There is a wide choice of carbs from a cheap junkyard Motorcraft 2100 to a Weber 38.
The cylinder head can then be changed to a 4.0 but I have had mixed reviews from those who claim 30hp gains to those who found no change when retaining the carbs and cam. It would be great if you could also fit the mid 1990s Chrysler EFI to the block but you will need a fair few bits to make it work. You could keep the single choke carb, it gives good vacuum signals at low engine speeds.
The head swap is documented here on Jeepforum on the CJ forum and on www.jeepstrokers.com
Would I go for a V8 instead? A lot more work than it sounds and it is heavier.