I've owned quite a few mk2s over the years, and have often thought of getting another as a round town runabout. They were the car that VWs reputation now was built on, very over engineered and properly looked after will last forever.
BUT they are old now, many of the rubber bushings will be shot, they don't have the soundproofing of modern cars and the oily bits will need to have been properly maintained.
So just buying one and chucking a set of coilovers on won't solve any problems. The axle bushes and top mounts will need replacing with decent quality parts. If you get cheap suspension you will get loud crashes when you go over potholes and small ridges in the road. If you just lower a car that has spend 20 years on standard springs chances are that the rear beam will knock on the exhaust and drive you potty; and a standard 16v feels like it has a giant power hole in the mid range where as a standard 8v has poor low speed throttle response on most cars thanks to the Digifant injection system (k-jet 8v's better response but probably not many decent ones left).
A decent set of gas dampers on standard springs will give the best handling for a daily driver, an 2.0 bottom end makes the car 100% better to drive whether it's an 8 or 16valver and new rubber axle bushes will make it safe to use at speed.
16v heads are a nightmare to repair.
For me it would be an 8v with the 2.0 bottom end out of an Ibiza GTI or similar minus the catalyst and the ECU written to suit. Power from idle to the (lowish) red line, huge torque so it wouldn't matter if you fluffed a gear change.
The bit where a 16v comes into its own is about 4500rpm and that's when you start thinking about the potential repair bills of a complicated 22 year old cylinder head going 'pop'!!!
Don't go on mileage on a car of that age if you want a daily driver. A mint low miler is too good to use daily, and a neglected low miler will be just as big a money pit as a high miler. It's an old car so go on condition, originality of body panels and paint and how much detailed history it has.
And we're not girlies here (and that goes for the women members too), don't get hung up on colour - it's a second hand car so you buy the best example not the sexiest colour!!