It's been discussed a few times before, and opinion is varied. Most say to never use an oiled filter/cone as this will slowly deposit oil on the MAF and cause dodgy running. Some induction kits use stainless steel mesh instead of oiled cotton, and so avoid any problems relating to this. The main concern when fitting cold air induction is to ensure you do just that: You have to make sure that you are not sucking in warm air that radiates from the engine - this is why standard airboxes are sealed units.
Now there are a few kits on the market that use sealed cone-filter units. This in theory increases the filtration surface area due to the larger surface area of a cone over a flat standard filter element, as well as keeping the air shielded from heatsoak. Some kits use slightly oiled cotton filters, some use the stainless mesh.
As for performance increase, as I'm sure you know, these kits are very unlikely to give any real gains over the standard setup. But from what I've heard, they can give you a louder, more throaty induction note, as well as amplifying the diverter valve.
Most of the popular kits are very expensive in my opinion, and I'm sure in some cases may give negative results if not fitted correctly.
As for makes, the most popular on here seem to be the BMC Carbon Dynamic Airbox, and the Taipan Quickshift. The Taipan however is said not to be the best fit on a B5. Fellow 1.8T owner Snoop has the BMC fitted, and he seems to be very happy with the end result. I must admit, it doesn't look bad in the engine bay either. But my money is going on a remap and cat-back exhaust at the moment. Maybe I'll have a go at the BMC thing in a few months time, but not until I'm entirely happy that it is both cost-effective and beneficial.
Hope this helps.
Drew.
