BDS markets a 2" lift kit for the '01 GC that will allow you to run
31x10.5 tires.  Includes coils and shocks.  (Don't know anything about
it though, found it by googling.)

Teraflex sells a 2" coil spacer lift that fits the '01, which also
allows 31" tires.  (I believe Daystar markets a similar kit.)  My
girlfriend has the Teraflex spacer lift on her '03.  Works fine,
doesn't introduce any handling problems, and is perfectly adequate for
running dirt roads and mild trails.

I have a neighbor who put a 6" lift on his '04 GC.  Don't know the
make.  He reports highway handling issues and several other complaints.

Try the North American Grand Cherokee web page.  You should find more
information there.  http://www.nagca.com

Coil spacers up to 2" are a cheap and easy way to fit 30" or 31" tires.

For more serious off road capability and to clear 32x11.50 or even
33x10.50 tires, there are some good 4" suspension systems available:

 http://rockkrawler.com
 http://www.teraflx.com/

You can get 6" or 8" long arm systems to clear 35" tires, but cost goes
up exponentially considering required upgrades for axles, gearing, drive
shafts, etc.

Some more info from a guy who sells custom kits:

 http://www.kevinsjeepparts.com/wj/wjlifts.html

Steve
http://xjeep.dyndns.org