THE Way I see it.
Well there are a few ways to go about it.
the simplest way would be similar to what I had done in the past running 180-190 hp.
Keep the stock torsion bars, use new oil filled stock shocks and some old bus snubbers. Set up the camber around 1 degree positive or at least a finger space between the snubber and stop. Put in urathan bushings around the spring plates/torsion bar connection.
Make sure the rear alignment is correct and have fun.
The down side to using snubbers especially if the rubber is hard is you can put a shock load into the transmission upon contact.

Snubbers can plant the tire all at once when contacted and that lock up is hard on parts. Fortunately the bus snubber is a little more forgiving then a type 1 snubber.
If you want to get a little more elaborate, and I think the much better way (and more $$$

) is to move to a larger torsion bar, with solid spring plate retainers, an adjustable shock and NO snubbers. And ideally, sway a way spring plates.
The hardest part is torsion bar sizing since there is not all that much done at the lower hp levels yet, but if I had to guess, if you had around 170-180 hp with a car that was around 1800 lbs with driver, I would guess a 26mm, maybe a 27mm torsion bar. Bar sizing is going to be based on hp and car weight. This dictates how hard the rear will squat while riding out first gear.
Shocks are going to be the next problem. Finding an adjustable shock that has the right range or getting them over to you. JCL and RLR have a shock selection for this.
An easy way to get the JCL equipment is through my buddy Dom at
http://www.thesamba.com/vw/classifieds/detail.php?id=359150 He can get the adjustable Vari-shock like I run and solid retainers like in that ad.
Sway away spring plates are very nice in that they do not flex as much as a stock plate would.
Ride height set up, I would do in the 0-1/4 degree positive camber range.
Rear alignment around 0-1/8” tow in.
If using one of the Vari-shock brand like I have, start out around 6 clicks and see what happens.
Doing it this way, this also gives you some suspension tuning capability with the adjustable shocks and allows you to correct for good and bad track conditions.
Tires. There are a few options. Personally, I am a fan of M&H tires. They have a 6” slick that would work, but you would probably have to pump them up to keep from bogging too much. M&H also has a street tires that might work pretty good too.
http://www.mandhtires.com/store.php?crn=73&rn=311&action=show_detailThe other option is Phoenix tire. They have a 6” slick that has a harder compound then an m&h, but might work pretty good for your application. Just really depends on how hard you want to hit it.
Another thing to consider is the front end. Personally, I don’t like dropped spindles unless you have the power to really carry a front end out and can keep the tires planted.
You can lower the front end a little, but make sure it can travel up freely. At minimum, just use oil filled shocks. You can look into using 90-10 shocks if you are having a problem keeping traction a little out off the line, an example of this might be the tires initially brake loose like you want and rotate a few revolutions as the car starts to move, but the front end tends to drop down prematurely and you loose your weight transfer and you continue to spin the tires. The 90-10’s will help keep the front end up a little longer.
or you can also get into adjustable shocks where you can tune the weight transfer more. Having adjustable shocks in the front is nice if you are having issues with big wheelies, you can slow down the weight transfer a bit depending on track conditions.
Then all this is coupled with the right combo of clutch too. Have too harsh a clutch and you shock every thing into submission and brake things. Ideally, you want just enough clutch. Personally if I had to guess that you had 170hp, I would probably start out with a stage 1 pressure plate and a stock type Daikin rigid disk. If that starts to slip when you get into high gear, you can either try a stage 2 plate OR a dual friction disk.
Well there should be some info to chew on for a while. Hope that helps some.