175k looks like the trans fluid is low and when I touch the fluid it smells a lil burnt is the color bad should I change the fluid or leave it alone. There'* a slight hesitation while driving.

It never hurts to change the trans fluid, but I would do a pan drop and filter change rather than a flush.

What kind of trans fluid do I use

Dex/Merc III

Never do a transmission flush on a high mileage vehicle, unless you want to replace your tranny a few months down the road.

.....and the transfer case does not share fluid with the tranny. It may be a good idea to drain and fill that as well. The transfer case uses the same TYPE of fluid as the tranny. Drain plug is 18mm. The fill plug is 18mm. Buy a cheap hand pump so you can easily get the fluid pumped into the case (otherwise, it'll be messy). The case holds 2.1 quarts. Both plugs are located on the back of the case.

I thought DEX 3 was discontinued, even GM recommends using DEX 6 in ALL the auto trans.

Yup GM discontinued DEX 3 as Mike mentioned, go with DEX 6, it is backwards compatible with DEX 3.

This is what I am going with the next time I do mine.

I don't know.

I picked up some Dex 3 at a local auto parts store as recently as 3 days ago. (if it'* discontinued, there still may be some on stores shelves.........anyways, if GM is now recommending Dex 6, then that would be the stuff to get rather than the 3).