At 150bhp they are really disappointing cars, should of been at least 180 minimum out the factory, don't get me started on the brake and suspension setup either!
As for your 4wd question, don't waste your money either get a 4mo car and drop a 1.8T in or just buy a s3/tt/a4 etc in quattro with a 1.8T. The costs and work involved are not worthwhile IMO. Plus putting power down is not an issue, I have been in a LCR mk2 with 360bhp and the diff is amazing, no torque steer at all when all that power is put down (so 4wd is not a must, yes it helps during luanch and handling, but if we are talking about the 8L s3 etc of them years then the haldex system was not that great, bit slow to kick in when needed and not as responsive).
Extending 5th gear has its ups and downs, you would need to up the power otherwise acceleration would be pants on a longer 5th gear, unless off course your modding it to do 70mph on non stop motor way journeys.
As for the 6speed on a S3, the 6th gear ratio is the same as the 5th gear on a 5speed gearbox, so top end should be same maxed out!
As for closer gear ratio's again, has its ups and downs. Acceleration wise the gear shifts whilst driving/racing will be changed much more frequently which is major speed/time loss during transmission. However acceleration would be quicker, but you have to weigh that against the time lost on shifting. Then you have another issue having short gears means that the gears act as bigger multipliers and traction would be kicking in more frequently to control that power on the ground on lower gears, but in higher gears it may benefit...
Personally I would stick with a 5speed box
