I Want To Modify My Audi A3 But Need Advice?

I have £3500 to spend and instead of buying a new car i would like to spend money on my Audi A3 1998 SE 1.6 as i love the shape of the car and its never given me any problems.
I would like to fit a new engine and was wondering if a 1.6tfsi engine out of one the newer models would fit my car. I would obv need the relative gearbox for that engine aswell.
The rest of the money would be spent on a complete re spray to pearl white with a full exhaust system and upgraded suspension, brakes and wheels.
Is there anything that anyone would reccommend, anything i have missed that would need to be upgraded, or any potential problems people can think of?
As you can probly tell im quite a rookie when it comes to cars.

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