a body lift will just lift the body of the jeep frame it self, most people do it to clear the tires from rubbing on the body, suspension lift lifts the whole jeep frame but keeps the axles in place
A body lift helps accomplish a few things, and, as part of a complete build can be extremely beneficial. For example, my 1.25 inch body lift allowed be to lift my gas tank 1 inch, my motor 1 inch and transfercase almost about 3 inches. I now have about 4 inches more ground clearance under the belly than stock. The extra inch of belly clearance came from a lower profile transmission mount which allows the skid plate to be mounted about an inch closer to the transfercase than stock.
The body lift was key to all of this and allowed me much better off-road performance while maintaining stock 'street-friendly' suspension performance and ride (the total package was well over $2000.00 though).
Some folks will say a body lift uselessly raises the center of gravity - I haven't noticed any ill effects...actually, it doesn't even feel like the center of gravity has changed at all.
Samm, Pookapotamus is right that the hardest part is getting advice. Everyone will provide advice from their perspective (ranging from mall-crawler
to high-performance off-road
). Just keep that in mind when going through the advice
Right now, I feel my jeep is a great balance between on and off road (but it's a Rubicon, so it started with a great off-road advantage).
hps4evr has some really sound advice too: go wheel it a bit so you can see where the weaknesses and strengths are - join a stocker-friendly run or two. You might find that your best performance gain is some different tires.