will a 3 inch lift work on a 06 Rubicon without dropping the transfercase? If this does work will there be vibrations and U joint issues? Will I need to invest in a drive shaft?  

Maybe. Try it. If it doesn't work, then get a new drive shaft made up.

It's in that gray area. Most likely it will vibrate a little, but it may not bother you. It will be most noticable above 50 mph.

Keep in mind any vibration is wear and tear on the pinion bearings, transfer case bearings and ouput seals.

A double Cardin drive shaft is as smooth as silk. Even smoother than stock with no lift. Add one into your future plans. It's a good idea.  

hey i got a 1998 wrangler and i used 3inch coil spacers.. they were cheap, ride quality is about the same and works great on road and for mild off road where extreme flex is needed, but i had to do no modifications at all to the jeep itself with no binding and very little vibes... i dont really take my jeep over 55 either.  

3" and no track bar provisions? Your Jeep must be a little sideways going down the road. And if you didn't use longer shocks you don't have much down travel.  

ftgiles:
3" and no track bar provisions? Your Jeep must be a little sideways going down the road. And if you didn't use longer shocks you don't have much down travel.

Not to mention if the bumpstops are not addressed then the shocks act as bumpstops and they wind up breaking the shock mounts.  A friend of mine at work had that experience, he kept breaking shock mounts till we corrected his bumpstops.  

The bumpstops had extensions in the kit.. You are right, with stock shocks the down travel does suffer.