Hello mate, you can go up to 35inch but you need to trim back the front wings between the door and arch. only a couple of inches otherwise on full lock the tyres rub and dent the arches (see pic of toy). you can then fit the Innovation flared arched which look fantastic. i have 2 defenders kitted with 35inch tyres, and they perform fantastic and look even better.
The downsides are a loss of power because the gear ratio has changed. you only really notice it on long uphills so its not to much of a hairy deal. I have 3.9's fitted with auto boxes so i do nt notice it now really.
The other downside is if you use it agressively off road you do stand a chance of breaking shafts and CV's. I fitted a KAM kit to my toy as i was breaking shafts and CV's regularly. The kit works.
Its a difficult one but if you go the 35inch route just see what happens, ie you have to do the wing mod but not the shafts. See how you go with the shafts and if you break a couple get the kit, its worth it.
The trouble with the 33inch tyres is they just arent 35" and if you really want 35" you will never be happy with 33". I had the same quandry as you and am so glad i went 35". hope this helps.