Yes, it is an IHI turbo. 
The MKVII is a totally different chassis to the MKV and uses the new MQB chassis module that is both stiffer and lighter than the MKV chassis, so overall the MKVII is around 60kg lighter. Combine that with more power and torque and it will feel much better. The MKVII you drove also could also have the performance pack and adaptive chassis control, which add to the driving experience.
When I test drove one with the adaptive chassis but no performance pack, it really was a revelation.
However - most of a cars handling and response are in it's bushes. So who's to say that a BRAND NEW Mk5 wouldn't handle "similarly".
To be fair for the breadth of ability of the car the asking price suddenly becomes less steep. Yes you can buy a 135m for the same money (basically) but just because it's got 100bhp more, doesn't necessarily make it a faster car over a country road, or a nice place to sit (the inside of the 1-series is like Eeores bottom)
