This is really ugly, for a lot of reasons. Selfishly, the GTI is about the best example of the niche of automobile that I prefer to inhabit (barring an infusion of wealth allowing me to jump up a notch or two), that is, performance-oriented, small, manual-transmission cars with front or all-wheel drive. Where I live, I can't really have a RWD vehicle, unless I could afford two cars for myself, which I can't. The GTI (I own a '12 at the moment) is far and away the best quality/performance/utility balance in this segment, a segment where the choices in the USA have been steadily diminishing. If VW's woes translate into instability, less R&D, corner cutting, shrinking dealer network, or contracting market share, I'm worried even the GTI will become an endangered species. Without it, the choices are Ford's ST (Focus and Fiesta, the former a bit cruder and the latter a bit too "boy racer"), the WRX (too expensive for what you get, questionable shifter and interior, seem to be the province of twenty-something slackers with backwards-facing ball caps exclusively, though the car does drive well enough), and the MINI (grossly overpriced and not nearly as refined as it should be for what they charge). Honda should have a new Si "sometime" soon-ish, but it's not really known how that will shake out, and the previous generation did not leave a good taste in anyone's mouth. A Mazdaspeed 3 is also possibly "on the horizon," but little is known. The Civic R and Focus RS are coming, but pricing looks, for the Ford at least, north of 40k with options you want, and from what the dealer told me, if you haven't bought yours a year in advance you're not getting one.
VW needs to stay viable in this niche to keep the niche going, as the GTI forces everyone to up their game in terms of overall feel, quality of materials, and performance. If these legal issues hurt them, I worry that niche products (in the US at least) like the GTI will be the first to go.