Lots of arguments on this both ways. Really, it's all about personal prefrence. A lot will depend on how much power you plan on making. For a given amount of power on a similar chassis, one being FWD and the other being RWD, a rear-drive will usually be faster out of the corners due to rearward weight transfer (over the driven wheels) which allows a higher output of power to the limit of traction. That being said, if you are planning on a 16v engine, figure a good 130 hp or so, for overall reliability and performance- that with a light weight car, and good tires, and a decent differential, there will probably not be enough power to "overpower" the front wheels under most circumstances and should be plenty competitive. Really the only time FWD starts showing it's disadvantages is when the car is either: A. making way more HP than both front wheels can handle for both braking, steering, and transfer of power, or B. improperly set up suspension which cannot compensate for weight transfer and smooth application of power. (more noticable in heavy FWD cars, think a Chevy Malibu!!)
With all of that being said, I also have an 84 Scirocco 8v, and I know for a fact that even with mostly stock (and very worn) suspension, factory swaybars, and tiny (and cheap) 175-70-13 tires, the car does everything I want at the limit, diving into corners hard and lifting the throttle piviots the car around nicely and the 8v, even modified slightly, does not have enough power to overpower the front wheels.
On a side note, just the other day, I was zipping down a gravel road at about 60 when I came to a hard left turn that was over a crest and not marked. I braked hard, and started my turn, and it put the car in a nice sideways drift. Got back on the throttle, front wheels came into line and away I went. If I were in my Camaro, I'd be upside-down in the ditch probably. Which brings me to another point. :roll: Not all RWD cars are created equal. My Camaro is a V6, with good weight distribution and big tires. Should handle well, right? Wrong. Horrible understeer all the time until the rears loose traction, either by too much throttle or wheel-hop on downshifting, then it's urine-inducing snap oversteer with no hope of countering. There is a reason why most Camaro's end up on drag-strips.

Good luck with your choice- I know there is a guy on the Vortex who is putting a VR6 in the rear of a 77 Scirocco. Should be oodles of fun when it's done.

Brendan
84 Scirocco 8v
00 Camaro L36 M49