I (well, an installer) fitted the AVH-8400BT in mine a few months back. Soundwise, even with the standard VW speakers in my ED30, it's been great.
I chose it primarily for the Advanced AppMode - I run Waze on my iPhone 4 and this integrates with the stereo to give a pretty good satnav. You can also do all sorts of fun things with it including running Dash Commander.
For me, because it doesn't have many buttons on the front, it doesn't look too out of place. It'll never look quite as good as OEM, but you can configure the colours and wallpaper to look as VW as you want.
Negatives? My installer supplied a faulty lead but that wasn't Pioneer's fault, and, if you have a lot of music on your phone, it can be sluggish at loading track lists. Apart from that, I'd definitely recommend it if you have and iPhone (I think there may be an Android version around, but you should check this - this maybe just the AppRadio).