I know this sparks the 'no replacement for displacement' chatter.

I am doing mods in small steps.

Starting with the suspension. next up I need to do the exhaust.

In the future I am planning on swapping the 305 for a mildly built 350.
Since I need to do the exhaust now I was thinking of trying to figure out what headers would work for both applications. and converting to a true dual exhaust since I don't have to worry about emissions since the car was built before the cutoff :)

what size/type headers would you guys recommend?

The 305 won't need anything larger than a 1.625" (1 5/8") header and a 350 crate motor will be happy with the same. If your plans for the 350 involve large port aftermarket heads and a moderate to large cam then 1.75" (1 3/4") headers would be the way to go.

As for an exhaust system I highly recommend the Pypes (http://www.pypesexhaust.com/) systems. I dropped 8/10ths and picked 2.5mph in the quarter with their F-body system.