Having owned a 197 for a year now, and before that a 182 and before that a 172 I can give you a pretty good idea of what the differences are.
Less low down grunt than a 172/182 and you don't really get a kick at 4.5krpm, but side by side against a 172 cup (considered the fastest of the 1*2's) my 197 rapes it every time.
Handling wise, sorry 1*2 owners but the 197 is in a different league. I was almost scared to go into a corner in the 1*2 but the 197 inspires so much confidence !
Fuel economy IS worse, on my 172 and 182 I would average 32mpg.. on the 197 I get 28.5mpg
Looks wise the 197 is the best of them all over the entire range, especially in white
Build quality in the 197 is in another world compared to the 1*2, Renault really have improved it massively (it's not a golf though
)
There are a few common faults on the 197 but nothing like the 1*2's and I have yet to experience any of them other than a sticky gearbox when cold. Oh and they do have a tendancy to kangaroo when cold as well lol (switching the traction control off sorts it though for some reason heh)
Overall the 197 is the best Clio out of them all, I would have no hesitation in buying one again.
Deffinately a step up from a 172 !! and don't you DARE get a 197 without Recaro's !!