I plan on picking up a set of 20's for my new XB, the recommended tire (at least from tire rack is a 235/30/20, I was considering a 225/35/20 because it's over $200 cheaper for the tires. My XB will be riding on TRD Springs any issues with rubbing with a slightly taller tire?

hmmm not sure man ... i got 20s with trd springs and im runnin 235 30s so ;)
http://i57.photobucket.com/albums/g229/co_d2004/me2.jpg

all depends on your wheel offset and wheel width

from my test fit, an 8" wheel with a +43 offset, the 225/35R20 wheel will fit with the TRD drop -- with just a very slight rub at full turn

go with the 35 series tire -- i just came back from NY for the Nightshift event, and needless to say, my 30 series tires didn't cushion my 20s enough