I think 'don't look nice' is something of a subjective comment - I think your wheels look utterly gash, but that's my subjective opinion on your Golf3's wheels.
If you want to do it then do it - it's your dime. Just make sure you get it done professionally by someone with liability insurance for doing that job.
And tell your insurer, too.
I don't quite understand the concept of 18" banded steels being 'better' than 16" as they'll weigh a sh*twad more and the car will handle far worse because of it.... but then you were talking about coilovers, so I guess handling's not on your agenda.