I too have a 97 P GTi 8 valver and was having a very similar problem. Whenever I approached a junction or roundabout and was slowing down, the revs would drop below usual tickover level (900) and then it would cut out altogether. only difference being from your problem the oil light didn't come on and it never did this when accellerating.
after looking at numerous forums, had seen allsorts of diagnosis and cures (pour carb cleaner in fuel line, air filter problems, hall sensor, ht leads etc) and asked a mechanic mate of mine who said none of these sounded like a cure.
Turns out the cam belt was 1 notch out so there was less power going to the engine hence revs dropping dangerously low. Cost was beggar all cos it was my mate and power now is increased and runs like a dream, had this fixed over a week ago and it hasn't cut out since! As I said it doesn't sound exactly the same but might be worth a look...