The 16v Mk3 is faster than the 8v by quite a bit. But if insurance is an issue, then go for the 8v and it'll still be better than your Fiesta.
Try shopping around for insurance quotes as getting a fresh quote (for a new policy) will work out cheaper than just changing the car on your existing policy.
Just having a GTI model will make it more expensive to insure even if it's just the 8v GTI with *only* 116bhp.
I would agree, definately don't pay anymore than £1700 for a Mk3 8v GTI and only a hundred or two more for a 16v. There's plenty around so don't pay silly money.
Lower mileage is good, but so is history. Look out for gearbox, clutch, ecu, ABS and electric window problems as these are probably the most common.
Welcome and good luck with the search.