I ordered the smaller engine mainly because I prefer the two tone interiors available only on the SE, which ruled out the FR, and I didn't want a diseasel. Since I wanted a DSG version there are only two options for petrol power. Full fat 1.8 or skinny 1.2. Since I felt the 1.8 is excessive for my needs, I only do a few thousand miles a year, and I didnt want an FR, there wasn't any point in spending thousands more. The 1.2 genuinely is that good that it can be all the car you need. If you're happy to spend more, then don't get me wrong, that 1.8 is so good it's almost rude! But personally I think the smallest engine they do is one of the finest engines I've ever driven... I specced mine back up with a few extras so I wasn't losing the good bits of the FR trim, and it is still cheaper than the FR, and every bit as nice a place to be.
I'm still waiting for mine to arrive, but having driven both the petrol choices and a diseasel version, I don't regret choosing the 1.2TSI even one little bit. A mate of mine has had his 1.2 for a year or so now, (13Reg) and he still loves his.