For a daily driver you might be better off with a newer model S-10. Anything with port EFI preferably, TBI would be a second choice. Since you really like the S-10 size wise, I don't think I'd advise anything else. If you want something really new, the Colorado (S-10 replacement) would be nice. A neighbor just bought one. Is yours a king cab? That's what I'd want -- no standard cab for me! I like to have room to recline the seats or store a few things inside.
If you really like that truck so much, you might as well inquire locally about a replacement engine. I'd definitely go with at least a TBI engine for economy and better overall running/starting, even if it's another 2.8L. But you can pull a Camaro 3.4L and it will all bolt up to your drivetrain (so will a 3.1L). Just have your trans rebuilt while it's out. You're probably looking at $4K for a low mileage engine with wiring and computer, trans rebuild, refresh/check xfer case, and remove/install. But it will still be paid for. Having the 2.8L rebuilt would be about the same. If you can pull/install that will save you around $1500.
Anything other than the 2.8/3.1/3.4 and you'll have to change the complete drivetrain out -- may as well get another truck. Well, the Cadillac 4.1/4.5 V-8 will bolt up, but the drivetrain really needs upgrading. That said, the 4.3L V-6 in an S-10 is killer! That would be worth considering if you get a later model instead of rebuilding/replacing your engine. Plenty power for the mid-size truck. But the axles and all on the 2.8L model need upgrading. A larger engine driven lightly will actually get better mileage than you get now, the same in the worst case.
What has this got to do with hot rods? Well, it's a parts chaser, and engine swapping is hot rodding...