I agree with a lot of what Saddle Tramp said, with CJ's it's all about how much money you want to put into it and what you want to do with it. I have owned 4 CJ-7's, a CJ-5, as well as a whole slew of other 4x4's. My CJ's were from mild to wild that included, SBC swaps, 1-ton axle swaps, waggy D44 axle swaps, 4/3 link setups,and stretched wheelbases. For CJ-7's I will list the popular swaps:
Common V8 Engine options: Chevy 305/350 (engine swap kits are getting cheaper and cheaper and you have alot of transmission/transfer case options), Ford 302 (not as common and you have to swap your front axle over to driver's drop), or stick with a AMC 304 or 360 (came in some CJ's and the 360's out of FSJ Wagoneer's could be found for cheap)
Common Trannies and Transfer Cases options: pick any of the motors above and you can find good combos to mate behind them. With the Chevy, you get good results with the TH350 or 400 auto and can run a doubler with the 203/205 transfer cases (makes for a really short rear driveshaft though, not gonna happen in a CJ5). I have always liked using a TF727 auto out of a Wagoneer (get above motor and trans out of the same truck) because you can mate a Dana 300 right to the back of them.
Common Axle Swap options: If you want to keep it mild and you have a early CJ7 with the narrow-trac axles (51" wms to wms), swap to later wide-trac axles (56" wms to wms). If you can, find an 86' that came with the D44 rear. If you want to go a little wider, but not full-width axles, try the D44's out of a Wagoneer (about 59-60" wms to wms), front has to be out of a 74' to 79' to be pass drop. Later Waggy's had a driver's drop front axles. You could also go with Scout D44's (60" wms to wms), keep in mind if you use the front axle, they came with 0 degrees of caster (CJ's had about 5-6 degrees) so they will have to have the C's cut and turned or it will be all over the road. Lastly, if you want go full-width you can use full size Chevy 3/4 or 1-ton axles, such as the D60 front and Corp 14BFF rear (65" wms to wms)
Common Suspension setups: pick your poison, SOA, SPUA, swap to wider longer YJ spring packs, etc. If you use the YJ packs, be sure to find a good set, preferably a 5 or 6 leaf pack and install a traction bar or you will have some axle wrap. Also, if you wanted to stretch the wheelbase a little in the rear, you can use XJ stock leafs, should net you about 1-1.5" lift, so if you do that, compliment it with a set of 1.5" YJ springs up front like the RE 1.5" SOA leafs. Also note, if you use the XJ rear leafs, you will have to relocate your fuel tank or your will have contact with the axle. Most put a fuel cell in the back or behind the rear seat.
Keep in mind, short of the wide-trac axle swap or anything that came in a Jeep CJ, most of the above will require lot's of time, fabrication, or money to buy the already-made kits/adapters to do these swaps. Also, above does not include the modifications to drivelines, steering, modified shock mounts, etc. that will be needed to do it right.
Those listed above are by no means all the swaps that can be done and are only the more common ones. It all comes down to what you want to do with your CJ. I have just recently started over to build a more family friendly weekend off-road rig. My setup came with a 304 V8/AMC Th400 auto/Quadra-Trac transfer case and narrow-trac axles. It's in the process of getting torn down to swap in a TF727 auto/Dana 300/ and either wide-trac D30/44 or Waggy D44's. It currently has a 4" SPUA lift and 33's, but will get YJ stock leafs setup SOA and some 35-36's. Like most, I would suggest wheeling it and modding it as you go to make it work for what trails you run and you learn a lot along the way about the strengths/weaknesses of your Jeep without overkilling it and spending way to much money if it's not neccessary. Just my 2 cents
This is how my 78' CJ7 sits right now with 4" SPUA, 33's
