The 1.6 XS may also be something to look into or if you're feeling really adventurous, you could do a complete swap and go mental with the 206 GTi or 206 GTi 180 plant.
Obvious drawbacks will always be insurance, but if you haven't had any accidents/ points/ endorsements, it might not be as bad as what you'd expect.
The GTi engine conversion will require a lot of work but you will get a lot of power back. Yes, the suspension will definitely need doing, as will the box, mounts and there may also be issues with wiring?
It is going to be on your shoulders what you decide, but if it was me, I would simply buy a GTi/ 180 rather than faff.