What would your recommend?

I have a ARC AAA limited edition which I have been carrying for 3 years and it still works and looks great. However, looking to buy another LED for myself and a friend. Looking for something around the same size as an ARC AAA and at least as bright(I really want it brighter tho). It would be an added bonus if it can survive like the ARC AAA.

I was looking at the Peak LED's which look good but they all look the same to me and i can't tell which are smaller and brighter(matterhorn, shasta etc). Also, is there anything that small with a luxeon (under 40 dollars)?

As far as I know therer is nothing that small with a luxeon yet, but there are some options. You could go with a Peak, but they are not as bright as the ARC AAA.

A good option is this light: .5 Watt LED Keychain Light

Here's a review: LedMuseum Review

Look at the Jil Rev direct drive on B/S/T. I have one and it is far brighter and whiter than my AAA-P, about an inch shorter but significantly wider, and runs FAR longer. In my opinion, it is THE ideal light for the size. You can get CR2 cells cheap at BatteryStation... but you won't be using many because of the fantastic run time.

W.

The Vortex KC1 also looks like a great and small CR2 lux light. Shorter than an ARC AAA but wider. I think they make a CR123 version as well. I've been thinking about getting one.

Standard excellent Quickbeam review at flashlightreviews.com