Keep in mind that you're only dealing with about a 50HP bike here. Gear it too high and you'll kill the bike's "fun factor". It will be a real dog off the line and lose most of it's "oomph" in the lower gears, the very things that make this bike so enjoyable. Also, the bike won't pull top gear to redline if you go much below a 32 on the back, it just doesn't have the power. Yes, stick with the stock 17T on the front. For the rear, I recommend dropping just one tooth to a 33. I know it doesn't sound like much but it makes a nice difference. It will drop highway cruising RPMs 3 or 400 RPMs, and won't kill the low end performance. I think it's the ideal choice for an 18" rear wheel and this motor's power output, and is actually what Yamaha put on the European models.
I've heard that JT sprockets are pretty good and are what I will most likely get next time I need some. I like steel ones as opposed to aluminum because they last longer. The small weight saving on the aluminum ones is negligible in my opinion, we're not racing here. A better deal can be had off eBay than from Mike's .....
https://www.ebay.com/itm/Front-Rear-Sprocket-Kit-for-YAMAHA-XS650-75-81-JT-Sprockets/322253941749?ssPageName=STRK:MEBIDX:IT&_trksid=p2060353.m1438.l2649
As far as a chain goes, being that these bikes aren't fire breathing tire shredders, I don't feel an expensive O or X-ring chain is needed. I just run a quality standard chain, a D.I.D. at the moment. They can be had for around $40 if you shop around.