Well, you could actually miss out on some potential power out of your upgrade across some of the powerband and driveability will suffer due to decreased velocity at lower RPM's. It is actually better to size an exhaust system slightly smaller than the max power you want to create than it would be to size it way too big. This is doubly true for a street vehicle. Right at the point the tube becomes oversized for the power you can make, you will lose some power as you continue to go bigger. I know it goes counter to how folks think, but turbo or not, airflow out of the engine is affected by both the size of the path area (pipe diameter/length in this case) and the velocity (speed of which it flows at a given RPM).
Specific Port Flow (cubic meter/sec) = Flow Velocity (m/s) x Average Path Area (m2)
When you increase the average path area (pipe size in this case), it can actually decrease the exhaust velocity, thus decreasing the overall flow. If you size your exhaust correctly (don't oversize it), the decrease in velocity will be as small as possible across the low and midrange.
For your 1.8, his advice to use a 2.5 exhaust is very sound. It would be a mistake to go bigger. Honestly, from what I have seen on other turbo cars, my guess is that you can get up to 300 HP (crank) with the 2.25" stock exhaust diameter for the 1.8. The 2.5" will likely get you up to 400HP with a single pipe.