That'll be bad news for them if they really want to compete with Mini as "boutique" sporty car.....
Suppose it depends what you're after, since there are a lot of different factors when looking at a car such as the Beetle (or MINI, or 500 etc).
The first is the badge. I suspect a lot of buyers are quite partisan - the VW badge has a very strong following and normal VW people are unlikely to be tempted by the MINI or 500, but probably into the Beetle.
The second is the shape itself. Again, different things will appeal to different people. I've never been too happy with the look of the R56 MINI since it looks like a cheap Chinese knock-off of the R53 MINI, and they've ruined the proportions too (though you can thank Euro pedestrian regs and cost-cutting for that one). The 500 was appealing at first, but now they're everywhere in the UK and I'm starting to think they just look daft. The Beetle will probably become ubiquitous too, but right here and right now I think it looks great, and although it's got a retro silhouette it doesn't look
too retro... i.e. it works well as a modern design as well as a classic one.
The third is requirements. The MINI and 500 are proportionately as small to the new Beetle as the originals were to the original Beetle. If you need practicality then, the Beetle will probably fit your requirements a little better.
The fourth is your own personal definition of ride and handling. Well, I suppose ride is less subjective than handling, though it wouldn't take much for the VW to be a more comfortable car than the MINI (which has quite a hard ride) and the 500 (which varies between "pretty firm" and "bone-shaking"). If you live in the UK (and I do), I suspect the VW will drive you a little less mental on our crappy roads than the other two. As for handling, the current hierarchy is MINI > 500. Where will the VW appear? Probably depends on the model you go for. Motoring mags have been very positive about the Scirocco and TT, and the GTI version of the Golf (less so, but not too bad, about the Jetta). So slower ones might be a bit less fun than a MINI, and sportier ones will probably be pretty close.
But if in doubt, points 1 and 2, badge and style, will always be the deciding factors. As it is, my money would be on the VW.