That Car and Driver article about the S3 Saloon shows that it has the expected safe understeer and it can be as fast as the Golf R if driven the right way.
Paragraph from article regarding understeer:
"Despite a modest weight to the linear steering, the helm isn’t light on feedback. Understeer will take over, particularly if the driver is hard on the throttle before the car is pointed the right way. For best results, pilot the S3 as you would any front-drive car, with lots of patience and control, never manhandling it like you would the wannabe rally cars from Subaru or Mitsu. The Audi doesn’t have the rear-end rotation that those cars supply under power."
Understeer isn't actually a bad thing and you can make a car understeer by poor driving techniques, the best lap times are achieved by people that learn a cars characteristics, adapt to them and don't try to make it do something it's not comfortable with. That applies to any car.
Just because you want it to behave like a <insert hot hatch here> doesn't mean it will and that you can complain when you run wide.
So, the discussion here is 'Does it have understeer or not? Yes it does, 1-0 to V8. Topic closed?
Does it make it bad handing? Not if you drive it in a smooth and controlled manner. If you don't want to drive smooth and with forward planning and you want to go out and throw it about like you're in a WRC car then it's not going to happen, you bought the wrong car.
We can also ask why Audi didn't give the S3 the power of an RS3 and the handling of the new TTS, well, two main reasons:
1. The cars all have to fit into their place in the VAG group structure so they don't cannibalise more expensive cars up the chain, so you won't get an S3 that handles like a Porsche and is as cheap as a Golf.
Audi could do it, but they won't.
2. Audis are supposed to be safe handling, fast cars, we all know that. The nimble steering/handling cars are in a different VAG range of cars.
BTW, The S3 Saloon was actually 1 second quicker but it did have different tyres so I'd call it a draw to be fair to the R.