my iroc's catalytic converter

hey guys,
i have a 350 5.7 tpi 90 iroc its got stock pipes ( they are small i think 2 1/2 in pipes) the guy i got it from only had a peice of fence piping where the converter should have been. Only driving it when he was allowed another permit... well i stuck on a 3 in converter hoping for less back pressure . I passed emmisions and about a month later i noticed a serious drop in hp should i go to a 2 1/2 cat? or is there a better brand i should get i hear a lot about flow master and im thinking about getting headers but i dont know if they are legal in az thanks~

edelbrock makes 50 state emissions legal pipes, random technology makes a strait through pipe cat for better flow. i wouldnt think that the 3in cat would cost you hp, unless something is wrong with it, clogged, collapsed, or welded incorrectly. something to that effect.