What are the known drawbacks to a 2003 VW Bug?

I have never ever heard of a new beetle catching fire, I think your brother is trying to pull your leg. Most of the main parts on the Beetle are derived from VW Jetta/Golf so are very well tested. Make sure the car has a full service history, never neglect the oil changes. The car is not brilliant on fuel because it is not an efficient shape, but we are only talking 3 or 4 miles to the gallon from a comparable VW product. The car will hold its residual value fairly well as there is always someone who will want one out of nostalgia for the "Beetle" The Lime green colour is also good and suits the car. If you have not had a test drive you really ought to do before making your final decision.