One needs to look at the module in the distributor (test it)and the ESC system (sensor, module, and harness connection). Replacing the whole ignition system is expensive and much more than swapping style of distributor.
There are two types of distributors that can be used, the original vacuum advance type and the Bosch mechanical advance distributor that does not use vacuum. The Bosch is best for high performance use, but the vacuum advance delivers the best city driving performance. Users of the mechanical advance typically complain about the 'flat spot' or hesitation on take off, but the flat out acceleration is superior. Electronic ignition distributors are now available in both types for conversion from the antiquated 'points' type ignition. The "standard" aftermarket distributor is the Bosch 009. They are very good and reliable and I have installed the Pertronics electronic ignition module instead of points and condenser and am very happy with it. I use a high output coil and can increase my spark plug gap to get better spark and better ignition and combustion. I have never noticed a decrease in gas mileage simply by replacing the distributor. The funny thing about the 009 is this; it's a great distributor, it works well, and has a great acceleration curve, but the standard single vacuum advance distributor works BETTER in most cases. I'm currently experimenting with changing out my 009 with a stock single vacuum advance 049. I've heard good things about them. Basically, if you can fit the distributor in the hole, the distributor should work just fine for your VW.
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