What are the temps if you drive steady state of 40 mph or higher? - Does it still get that hot?
If highway speed is fine, then its most likely an airflow issue, if not then there's more than likely another issue with the cooling system. Went through a similar issue a few weeks ago.
Things to check:
1) Shine a flash-light through the radiator/condensor and check for both light passage AND debri. If there's debri, hose it out from the engine compartment out....reverse of how it flowed in.
2) Like Roadie stated, check the wiring going to the clutch, as well as the fuses and relays for the clutch circuit. The a/c condensor gets any air first and warms it up for the radiator, so any air hitting the radiator is quite abit warmer than ambient with the a/c on, so more air is required to cool it. (It places approximately a 160 degree heater in front of the radiator). Its possible the fan clutch isn't speeding up when the a/c is on, you should be able to perceive the fan turning faster (blowing more air) with the a/c on, if not, there's a problem. - Also note that there was a PCM update issued for the new clutch to increase clutch engagement during a/c usage, it will make more noise, but also move more air.
3) Obviously the coolant flow through the radiator plays a big part, you can always pull the radiator and push water through it to test it. If the truck had the original coolant in it from '03-'04, a good flush may be in order to clean out the passages. (Mine's been drained and refilled a couple of times).
4) I know you replaced the thermostat, but what brand did you use? - Some of the after market units, Motorad (sold by the Autozone) for instance, has a significantly smaller valve openning.....which means, you guessed it, less coolant flow. (This was one apparently an issue on my Envoy).
5) Does the recovery tank bubble or does the level change substantially as the truck warms up? - A bad pressure cap can allow bubbles/steam to form, allowing the engine to run hot. (Might not be a bad idea to test it, although a new cap is like $9, might be cheaper just to replace it, unless you have a cap tester).
I was sure my LS1 fans had given up the ghost, replaced them with a 4600cfm set of flexalites (2.5x the flow), still ran hot. Replaced the thermostat (again) with an ACDelco unit and tossed on a new radiator cap, needle barely passes 210 no matter how hot it is or how I drive it with the a/c on.
To aid in coolant heat transfer, a bottle of either Red-Line Water Wetter or Purple Ice also improves efficiently and may help lower the temperatures as well.