There's plenty of info in the other thread on here, but anyway, I work on and modify these for a living. You'll find me as a vendor over on tdiclub. Here's my recommendation;
Get a mk4 (00-03) if you plan on lots of modding. They're the equivilant of the 94-98 12v dodges in the vw world. If you get an auto, you got a bigger injection pump but the auto tranny blows. Prepare to swap to a 5 or 6 speed.
If you prefer the mk5 body style, prepare to put a cam and lifters in them (~$600 if you do it yourself). Get the cam from Colt Cams though, don't go OE. Even when you use the right oil, they still have a tendency to eat cams. A gentlemen from Saskatchawan and I worked with Geoff (owner of Colt) to fix the cam eating issue. Turned out that vw put a solid lifter profile on the cams and the ramp rates are just way too high for hyd lifters. And of course, vw generally doesn't like to warantee it and won't admit faulty design.
The 04's and up started to use a 5 speed auto and a dsg tranny was also on option. They both seem to hold up very well. Just the 4 speed slushboxes in the mk4's suck.
