The only gain with capacity you will have is the volumetric displacement (pumps out more) of gasses which will help spool a large turbo up quicker and also a slight increase in off boost drivability.

The problem with the 1.8 is the pistons that you will have to use will create too high a compression ratio and lead to detonation. This means that the 1.6 can run a lot more boost and ignition advance than the 1.8 Sierra engine can.

Capacity is irrelevant once the engine is on boost as a turbo forces more air into the engine. The more air and fuel you can get into the engine then the more power it will make. this applies to both normally aspirated and forced induction engines.