The 305 and the 307 are both 5.0 liter V8 engines, but the 305 is much more powerful.
I have never had a Caprice wagon, but I understand they all had 307's. I have however had several Caprice sedans with 305s, as well as several Olds Delta 88s with 307s, and in my experience the 307 is much smoother and more durable. The power difference was too small for me to notice.
The 305 and 307 have one thing in common: They are gutless gas sucking turds. Underpowered and saddled with primitive emissions equipment that saps even more power. The 305 may be reliable and durable but it is slow and sloppy. It is rather cheap to replace it with another V8, like the 350, that has more power along with better fuel economy depending on gearing, while sharing the durability and reliability of the original engines.
Well if your looking for more power and don't care about gas mileage, do what I did in my 89 Caprice Wagon, drop a 400HP 455 Big Block in it.
I posted above - I've owned many, many cars with the 305 and the 307. I even had one '82 Caprice with the little 267 V8 - now that was admittedly a little low on power. But the 307s I had never seemed inadequate. In any case I find it hard to believe that anyone would find those V8s so underpowered as to replace them.
When my father overheated the 267 we replaced it out of necessity with a 305 and I can say that it really wasn't any significant improvement - besides which, the replacement engine is highly unlikely to be as reliable or well-installed as the original.
305 Tbi's are made that way for a reason. They don't have 275+ horses because they were not meant to be that powerful. They were strictly fuel efficient, emission restricted motors. That's it. They still put out more power than the 307's and 302's (even the 302's had/has and endless aftermarket) simply stock, they were probably the stoutest in their class. Taken care of, they run forever.
If you're reading this, don't yank your 305 out for a 350... unless you plan on racing from red light to red light with the idiots on here bating you. Your motor is built rock solid. With a little reading, you will see the smog equipment is pretty easy to delete. Few after market parts are available, but again, this is not a performance oriented motor. This motor will get you from A to B for a VERY long time.
I've owned several 305's and 350's. 350's are very good motors, but we're talking apples and oranges when talking 305's and 350's. A 305 a day, will keep the mechanic away! Take care of it, and it will take care of you!