My 2000 Volkswagen has the 150hp 1.8T engine. I do regular oil changes with traditional dino oil and preventive maintenance, and the car has only given me a small number of hiccups, most of which were taken care of under warranty. The engine itself is an absolute piece of engineering marvel, and is mostly bullet-proof (save for a few small parts).
The sludge build-up problem only affects the longitudinally mounted 1.8Ts, which means Passats (and A4 as well, I think). But to run into that problem, you have to be an idiot in the first place and neglect your oil changes. Also, pre-2001 1.8T Golf / GTI / Jetta are actually quite reliable for the most part, with only the occassional MAF malfunction. The MAF sensor malfunction can generally be cured by cleaning the sensor with 99% isopropyl alcohol, and even if a replacement is needed, the pre-2001 sensor is only a $60 - $70 dollar part. (Later model years uses a significantly more expensive sensor, for some reason.)
If you do get a post-2001 model, the coil packs is a recalled item that will almost certainly go wrong if it hadn't been replaced yet. Window regulators will likely die on you as well, dropping the window down all the way into door when it malfunctions.
Regardless of model year, the diverter valve (DV) is also a part that is prone to fail every few years. It needs to be replaced when it leaks, otherwise, the engine will not hold boost nearly as well and you lose power. I am fairly certain that the 225hp TT's diverter value will work in the 150hp and 180hp 1.8T engines, and that one will last longer than the stock one on the Golf / Jetta / GTI. You can also get a Forge DV that will never fail, although it needs to be cleaned regularly.
If you are into modding, the 1.8T is a gem to work with. Tons of aftermarket parts are available, with chipping being the most cost-effective thing you can possibly do.
Numerous VW dealerships have been (rightly) accused of refusing warranty service unless the problematic part has completely failed. Reputable VW dealerships do exist (I know some in Vancouver, near Toronto, and in Waterloo), but they seem to be the exception rather than the rule. Be wary of this fact before venturning into the VW world.
-Rick