Parts for the Jeep will be insanely expensive compared to a Land Rover/Trooper etc.
I'd have to disagree there - Parts for the Cherokee are, generally, exactly the same as the Land Rover equivalents - brake discs, shocks, springs etc. Servicing is dirt cheap if you do it through an independant - as the engines just need oil, plugs and filters, and the rest of the car will only need trans fluid, brake fluid, coolant and so on when the service schedule calls for it. No cambelts etc.
However.
A V8 Grand Cherokee will usually cost half that of the equivalent competitor, which can 'save' you some money - because they depreciate like a new executive Peugeot saloon driven off a cliff, are be prone to electrical problems and transmission failures, and the 4.7 is a dog of an engine.
The earlier (less modern looking 93-98) I6 engined cars are usually problem free, as they're effectively a Cherokee in a fat suit. The 4.0 I6, that most of them tend to have is the much stronger (mechanically), more reliable and infinitely easier to live with engine. It does makes less power, however - 190BHP and 220ft.lb versus 235bhp and 295ft.lb. The V8 is, on the plus side, marginally more efficient in certain situations. If it doesn't put a rod through the block.
As mentioned, late model Grand Cherokees can be fraught with issues - but it does, I suppose, depend on what you buy. The majority of them aren't cared for particularly well and the numerous issues tend to be things that have accumulated over time and not been rectified by their owner - so buy one that's done a sensible mileage, been looked after, and you won't go too far wrong.
It is worth mentioning that with the V8 ones, some of them seem to suffer premature transmission failure - there was a recall about it but I don't know if it's the cause of it - that was why I always steered clear of them.
http://www.carsurvey.org/reviews/jeep/grand_cherokee/
Have a troll through here and you'll soon see what I mean

You'll notice that when the new V8 model comes out in 99, the reviews just plummet to the abysmal - comparing one new model year to the old one at random showed that for the old Grand Cherokee, 70% would buy another. When the new model came out, it dropped to 29%!
I wouldn't buy one. I'd rather buy an XJ (regular Cherokee) as it's a much more competent vehicle, and infinitely more reliable. In fact, they're practically indestructible. If I did have to buy a Grand it'd be an early I6 one rather than the 'newer' model, for similar reasons.
The one you've quoted probably isn't an unreasonable price - although I've seen them go for as little as £1200, although usually more in the £2000 range. You could do worse than go and look at it if it's local, to get some idea of what they're like in person - so you're better informed when it comes to crunch time. That'll also help to allow you to recognise a good one from a bad one.
If you want an alternative, or need more power or torque for towing, you could get a more modern 3.7 V6 or 2.8 CRD (preferably tuned) Cherokee, as you can pick one of those up for about 4-5k now. Nice and car like to drive, to boot. Likewise, if you wanted to spend less, just spend £1000-£1500 on a really nice Cherokee and be done with it. You could even nab one with LPG for that money
Cherokees look better too
All of this depends on how heavy the boat you're looking to tow is though

A Cherokee (XJ 4.0) can usually tow about a maximum of 2300kg if it's properly maintained, has a decent trans cooler and a proper hitch.