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The A4 is definitely more refined and safer. It's different, but I miss my A3 sometimes. But then again I miss my A2 too.
Apart from rust, there is less things on a stock car that can go wrong on an A3 than an A4. But nothing that you can't deal with on the A4 (VGT mechanism and actuator, MAF, coolant migration...)
Yes the price is a bit suspiciously low, but it can be fair if the timing belt is due, if the clutch and flywheel are done, if the injection pump is leaking, if the turbo is near the end of its life. Those things go fore more or less a grand each. Just ask the owner. If you don't get straight answers, just pass.
One thing though, prices are really being driven down right now with the new 2009s flooding the market, so the blue book is probably overly optimistic about the value.
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