The major difference between the two is the strength. The TH350 is a very good performer if built right and will last a long time, not to mention they are CHEAP! They can be built to handle quite a bit of HP, however the TH400 will handle about as much HP and Torque as you can throw at it. For a mild street/strip motor a built TH350 will be more than adequate.
As far as rear gears go a good "middle of the road gear" is the 3.55 or 3.73. You will get decent pull off the line and depending on tire size will turn around 3000 rpms at 70. You would want a taller gear if off the line performance in your primary concern ie. a 4.11. For more highway manners you could move down to a 2.73 or 3.23.
It all really depends on your car and driving characteristics.
Personally, I am running a 560+hp Pontiac 455 with a TH400 trans, Transgo shift kit, and a 3.23 posi. My motor makes enough low end torque and makes all it's power below 5500rpms, so the 3.23 is perfect. And it cruises at about 2600 at 70.
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