I voted 350 turbo, but honestly my real choice wasn't there. I would go for a destroker LS1 with an aluminum block and around 300 or less cubic inches. To that, I would add a twin turbo setup, and a custom ECU with multiple maps. I would also use 16 smaller injectors rather than 8 large ones. The 16 injectors allow you to use only 8 of them at low speeds, and smaller injectors are more efficient at flowing small amounts of fuel than large ones would be, thus cutting fuel consumption. This would allow for a best of both worlds engine setup that could run on little or no boost unless it is needed, and give you in effect a variable displacement engine. Then again, I think there is a variable displacement system used on some LS engines (I may be wrong), in which case I would use that too. That way, you would get the highway fuel efficiency of a 150ci 4 cylinder engine at steady state cruise speeds, and you could also opt to run that way in bumper to bumper traffic as well. This would lower the effective minimum amount of fuel needed to keep the engine operating at idle or slightly above. Of course, the beauty of this setup is that it gives up nothing when running on the power map instead of the economy map. You still get the displacement you need, in a light package with the ability to produce prodigious amounts of power.
For a drivetrain, I would use the C6 rear 6 speed transaxle both for weight distribution, and to add the rear independent suspension. This would also permit additional floor space for the front seat as you could then narrow the transmission tunnel to that which is needed only for the diameter of the torque tube. As an additional feature, I would then mount the gas tank under the back seat, if room permits so that the majority of the vehicle's weight is now located between the wheels and thus is not providing a pendulum effect around corners. The mufflers could then be located under the trunk floor instead of under the back seat. The trunk floor could also be redesigned with the spare tire now in a well instead of off to the side, and the floor itself could possibly be lowered to provide more room. This would allow for more even weight distribution and more usable cargo space. Sorry if I got a bit carried away here....
