Currently considering buying a 2001 S3 in the New Year, could this be a bad move considering a new model of A3 is out, do you think it will hold its value for three years?

OR should I buy a 2003 A3, ex demonstrator for around £16K?

Well despite Audis holding their value well, you'll still lose more on the new car, as although the S3 would depreciate, most of its depreciation has already occurred.

As for the ex-demo A3 for £16k, depends exactly what model it is and what spec I suppose.