If you want to run bigger tires without cutting the fender wells bigger, you are going to have to lift it up somehow. The most popular ways to do that is with a body lift or a coil spring spacer lift. I would do the coil spring spacer lift, personally. There are lots of info on this site about how to do the coil spring spacer lift, if you do a search. There are even some people on here that make the spacers, so you can buy them from them. The spacer kits run around $150.
If you want more traction, then your choices are a Lock Right locker or a mini spool. I would only run one in the rear axle. Again, lots of info on here and other zuk sites on lockers and mini spools. If you are going to do much street driving, I would run a Lock Right, over a mini spool. Lock Rights run a little over $200 and mini spools run a little over $100 each.
All of these mods will still keep it street legal.