Not sure about Mk2, but for the Mk3 there is an S mode and when you press one of the flappy paddle shifters it goes into 7 preset gears (hence M1, M2 etc.). When in this manual mode, it will automatically downshift when speeds drops too low for the given gear. It will not upshift; you have to do that by using the paddles.
So did you activate manual instead of S somehow? Just to be sure. And also S mode does allow more rpm than D, to make it respond faster.