I've had both a 2002 S2000 and a OEM+ 2004 GTI 1.8t... and although not an R32, the usage and reliability still applies...
Given the budget I voted for the S2000, simply because I think you'd get a more reliable, more fun to drive car based on the prices of those two cars here (Northern California). Most R32's in that price range, in this area, are high mileage... something that I would not want in any VW.
That said, if we are talking hypotheticals here, and mileage and year are the same, I would pick the R32. I'm 6'2", 175lbs, and even with modified seat rails and a hard top, I never fit well in the S2000. It drives like a go-kart, like it was designed to be... but it also rides like a go-kart, and that got old, especially during the morning commute. Some people will tell you that they can get a trunk full of small crap in a small car and that's supposed to be impressive... well try getting anything larger than a 12 pack of beer in it and then come talk to me. Yes, you can go to the store with it, but you have to be crafty with everything you buy... every... time... Also, like someone else already said, the powerplant leaves much to be desired when not driving the wheels off of it. One time, I distinctly remember thinking about how many shifts it took for me to accelerate to 45 mph while next to an Accord that seemed to effortlessly float to the same speed. If you're not pushing it to the v-tech line, it's essentially a dx civic. The S2000 makes an amazing car as a second vehicle, and if that was an option for me, mine would still be in the garage.
The R32 is pretty much the best of all worlds. It's relatively quick, handles decently, can move a small apartment with one, and it has a rare quality that is always redeeming. It doesn't do any one thing really well, but it's a good all around GT car for those of us with lives outside of "track days". Not that it would be my first choice of car in this contest, but given your choices, this is how I see it.