You won't reduce understeer much by lowering springs alone.
If you are looking to reduce understeer you would need to replace the anti roll bars (ARB) with larger ARBs. The ones from Neuspeed or the ARBs from the VW Golf 4Motion seems to be a popular choice.
If you are going to change ARBs, you'd be best replacing dampers to a shortened version, e.g. Bilstein B8 Sprint or Koni, and a suitable set of springs - Eibach Pro Springs and H&R are the most popular choices.
Have a chat with Ess_Three (Glen) or SCOTSTHREE (Steve), they both have Bilsteins with H&R springs and new front and rear ARBs and swear by them!
At the same time when lowering, you'll need adjustable rear tie bars to sort out the negative camber. After lowering, the rear negative camber is quite high and needs adjusting. The only way to put it back to the recommended setting of -1.0 is be means of the adjustable tie bars.
Then you would need a 4WD laser alignment.
Suspension ain't cheap mate.
I got my Bilstein B8 Sprint dampers and Eibach Pro springs for £600
Adjustable tie bars - £250
ARBS - guessing at about £300
4WD laser alignment - £95 + vat (dealer price)
then you have fitting on top of that. Supposedly the front ARB is a b!tch to fit! Realisically you would be looking at £1500 all in for all that work.
That should make your S3 handle like it's on rails!
Here is some useful info on ARBs supplied by Ess_three (Glen) when he had his front and rear ARBs fitted at Star Performance:
Star Performance Testing Day Pt8 Anti-Roll Bars
