what should I do

How many miles are on your current block and do you have/have had any mods on it? Is it an AOD or manual?

If your block is good, I would rebuild that. Use that same $3195, to buy some new heads and intake and stuff. 320HP will probably only be around 275 to the wheels. I know you can get 305 RWHP with a 306, afr165's and a cobra intake. Plus add the usual bolt-ons.

Sean

Manual or not it really depends on what you are trying to achieve with your setup and how much your budget allows for spending. If you want the most bang for your buck - I would simply rebuild the block and slap on a thumper ported head/cam combo, a cobra intake, and a 65mm throttle body. If you check out thumpers website you'll see that a combo like this can net you some very good ET's that won't break the bank.

Now if getting a new block is something you really want to do you have a few options. If you just want a reliable stock hp powered stang then I would probably look into getting a remanufactured motor from jaspers - they have a warrenty on their motors and I picked one up brand new for 1500. If you're looking more performance wise I would go with something from DSS, CHP, or World - but these can also get very pricy.