A diesel would be a good choice, although if you want an earlier
Ibiza MK4 you would have to get a 1.9TDi 100, as thats the smallest diesel they did. Until the 1.4TDi came out in about mid 2003 - 53reg. But for one of those it will be £3500>
Insurance will be a lot more for a diesel, 1.2 is group 2 i think, the 1.9TDi S is group 5, 1.9TDi SE group 6 and the 1.9TDi 130 Sport is group 7.Which means lots more insurance!
Plus you will have to declare all the mods, remaps etc. SOme insurance companies wont even want to know.
Still, you would need to declare all of the mods on a 1.2 also ... So you could probably insure a modified 1.2 or a standard 1.9TDi 100bhp S for the same.
Id go with the 1.2 for a first car, live with it a bit with subtle mods and then maybe upgrade if you want too.