[Brad54]

I got 15-17mpg pretty reliably with my '61 suburban.
Crate 350 290hp, 3.42 rear gear, tall tires, 4spd OD manual trans with .72:1 OD.

LS engines are awesome, but fuel injection and computers are expensive, and they'll require fabricated engine mounts, electric fan, electric fuel pump, return line to the tank, etc etc.
A carb'd small block is still the cheapest and simplest way to go.

For the OP, if you dig the wrap-around windshield, the '63 is the way to go. Front suspension will swap with later trucks, as a bolt-in. 5-lug conversion if you want, disk brakes, sway bars, etc etc.
Rear axle is fine.