More airflow = more power. Sounds like it's time to get into the heads. Any porting at this point? What do you have for intake manifold, exhaust system, carb, how well tuned (pretty good to get 25 mpg with that cam).

Yes, you can step up to a bigger cam but make sure you take care of any other areas that may be limiting your power. As Banshee says, the engine has to work as a package. Adding compression will help as you suspect, and will also gain back some of the fuel economy loss from the bigger cam.

The advice given above regarding a conservative package is applicable to 99% of the cases out there. Of course, there is always 1 in every crowd!