I'd bother, I cant think of much thats noticeably better for 3 grand without moving up to big engined cars. The 318i is better built, it's a better quality car, sure it's not going to be any quicker but in every other respect it's a superior car and it's only a grand.
As for the A4 - why buy a 95-00 model A4, built to compete with the old 3 Series, over a 99-06 3 Series? It's a later generation of car.
Remember with the right engine in it people are still paying up to £20k for this shape 3 Series - it's a fundamentally decent car even if this one is lacking in spec and pace.
Don't forget how totally crap his current car is. There are few cars that are more hateful to drive than a 1.6 8v Astra.