Chances are it's just the switch, if you search on here there's a post every couple of days that comes down to 'replace your ignition switch'!
The part's cheap (make sure you get the 4
B0-905-849 one, not the A version, for your early car) and changing it is pretty easy with just a small screwdriver required...except for having to cram yourself into the footwell head first and upside-down to reach it!
Check this thread for some suggestions...
http://986forum.com/forums/general-discussions/46411-ignition-switch-replacement-holy-crap.html