The 3.7 pairs well with the H3, IMO. It's not going to win any races, but I have no complaints WRT gentle upgrades around town or merging into traffic on the highway. And it's quiet as hell (that's probably the truck's design, not the engine's). That said, there's not a lot of pep to spare - meaning that even a little less HP would probably start to get annoying. I've never driven a 3.5, so I can't comment on that personally, but the consensus seems to be that it's not up to the 3.7, performance-wise. Take that for what it's worth.

Edit: One more thing I should add is that if you're planning to pull anything on a semi-regular basis, the 3.7 may not be the best choice.