You'd still have to bore the cylinder holes out if you go beyond 1641cc though...
I can't really see any disadvantages to mild displacement increases. Around the 2000cc area you start getting into longer stroke cranks which will require some clearance work inside your case and likely some trimming to be done on your connecting rods. At that size of engine, you also have to consider extra oil cooling and crank case venting.
Depending on the state of your current case, it'll likely be more cost effective to rebuild it yourself. (You'll still need a machine shop to bore the cylinders and likely do an align-bore on the crank journals.) That way, you'll be able to salvage most of the small items that really add up (ie: engine tin, fan shroud, alternator, wires, etc.) and spend that money on good quality heads, cyilnders, performance cam and a counter-weighted crank.
If you're going to have a shop do it, then beware of engine builders who offer unbeatable prices. Are you going to dismantle your engine to try and figure out if all of the "name brand" components they put in it are actually there, rather than the cheap imitations? At least if you build it, you know whats in it (not to mention having the satisfaction of having built your own ride when you race a cheap-ass Honda that's been put together with pieces from the Walmart Auto Accesories isle ;)
The first engine I ever built was my 1776cc and although I couldn't beat my brother in his Datsun with a 2.8, I gave him a damn good run for the money. Not bad for a complete engine building newb ;)
A small amount of displacement increase (like 17-1800cc) plus a performance cam, counter-weighted crank, lightened flywheel, and a good set of heads will go a long way to getting you up and around those hills faster. Also, since you aren't clearancing the case, the case will still be durable and able to rev quite a bit higher than your stock engine. (You dont NEED to shift at those little dots on your speedometer any more!)
One thing that you *must* consider if you want longevity out of the engine is to add an oil filter. Kits are easy to find, but if you aren't mechanically inclined, you should have a shop tap the case for the oil return line. Oil cleanliness is the main factor that will determine the longevity of your engine.
The only disadvantage to more CC's is that once you feel the increase in power, you will always want more. My 1776 is nice, but I'm working on a 2.2L
... must... beat... the Datsun ;)
-biggie