I think it was RJ that pointed it out. The Mk3 was actually a better car overall than the Mk2. It had a stiffer shell, better engine, better balance, etc. The only thing that let it down, and gave it the crap reputation was the Mk2 suspension components and soft suspension. The Mk2 was lighter so it coped better, the Mk3 was heavier so the soft suspension didn't really like it, hence why it probably has the boat name.
Take a well sorted mk2, and a well sorted mk3 and I'm sure the mk3 would win it.
As for engines, 16v is best of both worlds. Decent fuel economy, good power, not very heavy compared to VR6 and smooth delivery too.