TBH, if you're on that sort of limited budget, you'll never get a concourse class show car, but you can get a decent car that drives well. And if you're a young driver, it'll be cheaper on insurance if you don't have a ton of mods on the car.
So get yourself a car that feels good to drive, cos that's where it really counts. It's certainly what I prefer.
You're not going to spend all day looking at the grill saying it's rubbish, you'll want to be out there enjoying driving the car.
A Mk2 in good condition will probably handle better than the equivalent Mk3 because the Mk2 is lighter and more agile. The Mk3 always feels heavy, and it's only when you get the bigger engines that the car gets quick.
btw: If you don't happen to like the round headlights on a Mk2 Golf, you can either fit rectangular Jetta lights or Golf Rallye lights.
On here, it seems that the popular first car route is the Mk2 1.6 Driver, add tasteful mods, perhaps a change of grill and lights, lowering a bit, put on some alloys and wait till you've built up some no-claims bonus.
You can do worse than to drive one of each, then you can say that you prefer one car to the other, as a drivers preference not just to look at.
