It's a very good question. My last Mk2 was a 1.4 EX Manual and I felt it was an excellent car. It had a panoramic roof, discontinued on the Mk3, and more cupholders (the Mk 2 had one on the passenger side). Another good feature of the Mk2 - discontinued on the Mk3 - was the two compartment glove box - the top section could be used to keep a drink cool as the air con was routed into this.
In terms of driving I think the Mk3 has the edge, it gives slightly better fuel consumption and I felt the acceleration was sharper (although the figures don't really reflect that).
On balance I think there is evidence of cost cutting on the Mk3.