[hatzie]

If the tank depth is the same then you'll be just fine with the same sender. The sender measures fuel level in inches from the bottom to the top not gallons of capacity.
The stock GM fuel sender and gauge are calibrated to not start dropping for around 1/8 of actual capacity to give the perception of better fuel mileage.

If you hooked up the sender ground from the tank ring to the frame then you probably have an expectation issue... your expectation is calibrated for the 25 gallon tank so you're expecting to see needle movement in 20-50 miles.

Since the depth is the same... 1" of float drop on the 31 gallon tank = more gallons than the old 25 gallon tank. The fuel gauge needle should behave noticeably different because it takes more miles to burn more gallons.
Assuming 13mpg and a 31 gallon tank you should see around 1/2 - 5/8 on the gauge once you drive 200-210 miles.
On the old 25 gallon tank again assuming 13mpg you would only go 160-170 miles on 1/2 tank...