Those tires are not that bad. Just be sure they are properly inflated and drive them until tread is down to 4/32", then replace. I doubt that will be a year from now; probably a matter of a few months.
What is the tread depth now? I typically replace mine at 4/32" tread even though 2/32" is the minimum legal tread depth in most states, 3/32" in some others. I don't like to run my tires bald. I definitely won't run tires with less than 4/32" tread in winter rain or snow.
What is the age of the tires, i.e. week and year of manufacture? [see link above for where to find.] Nissan and some other vehicle manufactures recommend replacing tires at 6 years. Other manufacturers state that tires can be run up to 10 years with regular inspections.
As for tire size, get what works best for you. I wouldn't run 33" tires with anything less than a 3.36:1 gear ratio with automatic transmission (3.69:1 with manual), and I would not buy 33" tires just for looks, but each individual has his own priorities.
Since you hunt and take your rig offroad, my recommendation would be to resist the urge to save a buck by going with "P" rated tires and get an LT tire. I think you will be happier in the long run. You might consider the Cooper Discoverer AT3, Goodyear Duratrac and Kelly Safari TSR, all three of which are available in an LT265/75R16 with a "C" load rating, which is perfectly matched to the weight of an Xterra and will give you good ride quality on pavement as well as good performance offroad.
I went with Cooper Discoverer ST/Maxx tires in the LT265/75R16 size because they are a true 32" diameter rather than the 31.6" diameter of most other LT265/75R16 tires, but without the excess width and extra weight of a 285/75R16 (32.8" dia.) which would only net an additional 0.4" in ground clearance. The St/Maxx has an aggressive tread which works well offroad and 3-ply sidewalls for strength, but are only available with an "E" load rating. For me, the stiffness from the E load rating was an acceptable trade-off to get the extra strength of the sidewalls.