If I want to go to grad school for theoretical physics, should I opt-in for the minimum classes required so that I get good grades, or higher level classes so that I challenge myself, even though that will affect my grades?

You should take the hardest classes you possibly can and still get decent grades (B average).  Also, there are ways that you can take classes without getting it on your transcript, so that it will be good for you to take classes that will challenge yourself. People care less about the GPA than the difficulty of the classes you take.

The word "easy" does not belong in the same sentence with Theoretical Physics. To prepare for a grad program in Theoretical Physics this is the kind of  problem you need to be able to easily do at the Junior level. As different programs offer different courses, let me give you a very incomplete list of the Math topics you need to have at the undergrad level, in order to prepare for such a grad program. I would strongly suggest taking them from the Math dept, as they tend cover the material more rigorously. In fact, it would be to your advantage to get a double major in Math and Physics. Abstract algebra - especially group theory Vector spaces - including subspaces, inner product spaces, orthogonality, orthonormality Special functions - Bessel, Legendre, etc. Distributions - especially the Dirac Delta "function" Green functions

Theoretical Physics and Easy Classes are an oxymoron. . All theoretical physics classes are Hard. Take a look at the undergraduate required courses at MIT for physics: http://web.mit.edu/physics/current/undergrad/major.html . And grad school means PhD and Research. Research in Physics is Discovery, and discovery is tough. All the best.

If you want to work as PhD level physicist in academia or industry, as opposed to just getting a PhD and job that is lower level or not that related, you need to stand out.  Competition for these jobs is really high, and many highly qualified people end up as long term post-docs.  In light of that, if you don't have success in rigorous and tough courses, or in appropriate research, your chances at long term success are low.  Minimum will not cut it. Graduate courses are largely about specialization.  What you want to do as an undergrad is get a good grounding in the basics of physics and math, including mechanics, E&M, statistical mechanics, quantum physics, and physics/engineering math.  The high level physics courses you mention are all optional.  While you want to have an area of concentration to show you can do grad level work, it doesn't have to be one of those you listed.  Much of the math you listed isn't really optional for a physicist, and when and where I went to college, were required to graduate in any physical science or engineering.  I highly recommend taking at least one math course at all times. The other critical area of importance is to work closely with one or two professors in some area of research, theoretical or lab.  Their recommendations go a long way.

The single most important part of getting into a good program is doing well on the physics GRE. If you already have some grade issues, I'd suggest studying up on your fundamentals and crushing the physics GRE. There is no better way to get into graduate school than doing well on this exam. If you want to learn some of the material, I suggest sitting in on the class and working though homework. You will learn enough to make the transition into graduate physics easier, and not waste your time trying to get an extra 5% on a homework grade. Just to be perfectly clear, CRUSH THE PHYSICS GRE. If you score 800+ you'll have a shot at getting into the school you want. Good luck!