Ok guys, I need some opinions on what to do first. My jeep currently has a 2" spacer lift and 33's on 15x8s everything else is stock. It has a 4 banger and a 5 speed. It is my daily driver and only sees moderate to scenic trails most of the time when offroad which is only about 20% of the time with 80% on road driving.

Should I put on a 4" suspension with disconnects, OR put in 4:88 gears and lockers front and rear. Budget will be about $2500. I figure that will allow for a 4" Teraflex suspension, OR ARBs front and rear. All other brands are off the table.

My question is should I do the Teraflex lift 1st or the Gears and ARBs 1st?

Depends mostly on where and how you wheel.
In Moab where even on the easy trails you spend a lot of time going up and down steep slopes I'd go for gears.

On the other hand if you spend more time on level ground and snagging the frame has been a bigger issue then more lift could be good.

Personaly I'd add a 1" body lift so you can flex the suspension better and do the gears.

It seems that once you do a 4" lift you may need to also consider driveline upgrades (elminate vibrations)... which will probably still fit in your budget. Especially if you are installing yourself.
If nothing else a 4" lift will make your ride look good! A wrangler with a 4" lift and 33's just looks right to me, the width to height ratio is dialed in. I am also considering ARBs myself but I am already at the 4" lift and 33 mark. For the trails I have been doing in SoCal either option would be a good choice. The added height helps keep the chassis away from the rocks and the tires gripping the ground. Although your height and adding lockers would help your ride get over the same rocks with only a little scraping.

Holy cow - the two suggestions to your description of very mild off-road use 20% of the time are a little over the top in my opinion. I started very much like you, with a 2" spacer lift. I settled in at what you see in my sig. Do yourself, your wallet, and your drive-train longevity a favor and avoid tall lifts.

I have wheeled my jeep for three years now with a 2"bb 1"bl and 33's and open diffs. and it does everything that my buddies with 4 and 4.5" lifts do. I am just now upgrading to a 4.5' re long arm but I no longer drive my jeep everyday. My opinion would be to invest in all the skid protection first,gas tank, belly up, oil pan and a 1" bobylift. then maybe think about gears and lockers. Just keep in mind the fact that you do have a dana 35 in the rear, how much $$ do you really want to invest in that axle?? Maybe save for a complete axle upgrade!! Just my $0.02!!!

I tend to the EXTREME end of the jeeping range - but one of the major problems
that I see here in AZ is someone investing in all the off road gear - BUT not
the safety equipment - by that I mean the SIX POINT roll cage (add ons whatever)
and seats and five point harness - so then when they finally get in trouble and
roll their rig - they die ... Or get hurt really bad. The stock roll cage will
not hold up in even a light road crash and the seats break and the belts have
a habit of popping off in a crash - and letting you fly around.

Gas tank skid plate first - weather you break it or burn with it ... Its in the
very rear of a TJ and any rear end collision will hit it. I was luck and I broke
mine within three months of buying my jeep and upgraded to a 3/8 all steal tank
with 3/8 integrated shield, so when I rolled my rig - I lived...

The Tuffy security box kept all the deadly heavy stuff in the box and it did not
cut my head off - or crush me - worth the money - the heavy duty bumper and tire
carrier stopped the cage from crushing - and I re-used it afterwards for years.
If you don't have a full size spare - you are hosed.

Air compressor - no air - no inflated tires - no tire repair ? All depends on
how much walking you like to do - it is 113 today - I vote for NO WALKING.

Solid - strong bumpers mean you can hit rocks - and other cars - and roll away
with minimal damage - the stock stuff is worthlessssssss. Armor - all you can get and YOU NEED IT all depending on what you do.

A quality lift kit - in the range you need - and wheels and tires that will take
the damage your area demands - I went through sixteen wheels and twenty seven
tires in eight years !!!!!! people would ask me home much mileage I got out of
my BFGs - I never new - I never had a tire make it past 50% before it died of
side wall or chop chop damage.... ten thousand of REAL off-roading is ALOT for
any tire.

Spare water, bail out kit, a big first aid kit, radio, cell phones, GPS, maps,
survival kits, spare parts, tools, More tools, MORE WATER, more parts, Welder, air tools, air tank, CB and 2 meter radios. Jacks, winches, winch kit, more winch stuff, wire, toe straps, more straps, spare cash ....

Just Empty Every Pocket (JEEP) - there will be no spare cash.
I'm pretty sure that the reason my wife never liked my jeep
was because it had a better lock on my cash than she did...

I appreciate all of the replies. I have been doing a lot of thinking. And have decided to to do a 1" body lift with 1" raised motor mounts also. I will also add a Kilby gas tank skid to raise up the gas tank about an inch and do some turbo city rock sliders. and add a set of quick disconnects.
Does anybody recomend a good quite set of disconects? That are not a pain in the a** to reconnect after being offroad. And then possibly adding an on board air system.

I liked the JKS unit - but I would do some research to see what is out there - if there is something that you don't have to take apart and then lay down on the ground fiddle with to get it
hooked back up great !!!! The original RE unit I got was crap - mostly I unhooked it and then put it back together in the garage - which meant that sometimes I was driving a long long way without them...

Bar pin eliminators from JKS so the top shock mounts do not slide off and break the top of the
shock mount ... Otherwise noisy and a pain...

Here in AZ I also recommend that you put a front
axle seal kit that make the front D-30 water tight (dust tight) $150 .

If you can get the money for a tank as well as a compressor - go for it - I always have TWO ... One in the engine box and one portable.

I have the JKS discos on my jeep an love them they come off in about 8 seconds and they go back on in the same. i really love the fact that you dont have to be on perfectly flat ground to release or put back on.

My first generation RE ones were like that - crap - I have the first gen JKS and they are way better - I hear that they have a better model - now - mine is almost seven years old...

When did you get yours Stumpy ? Is there a newer
model now ?

Has anyone got one of the new electric disconnects?
What are they like ?