Personally, I'd go for something newer - it'll cost you less in the long-run as a newer car is less likely to suffer expensive mechanical break-downs (in theory).
To be honest, if you want something even remotely better than a low CO2 boring-o-mobile, you're going to have to pay for it - it seems to be the government's way.
If you like a growly V6 then my own current choice of jalopy is worth a look. It is a MG ZT 190 (190 HP 2.5 V6) - nice examples on an 02 or 03 plate can be picked up for 4-5 grand but be warned, an avge of 24 mpg will sting you at the pump and by 2010 it'll cost you £415 to tax it for 12 months. Still, that V6 growl when you open the taps above 3000rpm is highly addictive. For the money you do get a whole lot of car; in '+' spec you get climate, CD changer, multi-function steering wheel and part-leather seats.
Which leads me onto the MG ZT 160. after 53 plate the 160 changed from a de-tuned KV6 to a turbo-charged 1.8 4 cylinder. This sits in a lower tax bracket, is almost as quick as a 190, still as good around the twisty bits, gets about 30 mpg but unfortunately needs cossetting to avoid the dreaded head-gasket failure.
Or for the best of both worlds, why not go diesel power? modern turbo-diesels have loads of grunt and some quite sporty models are powered by tight-arrse-juice these days. older Audi A4s, Skoda Octavias and dare I say it, BMW 3-series diesels might be worth a butcher's.