Pulling torsion bars is not recommended. It weakens your beam and can cause it to snap in two which is not fun while you are driving down the road. I would advise adjusters, dropped spindles or an adjustable beam to lower a Volkswagen Beetle.
Adjusters can be bought for around $15 for cheap ones or $50 for good quality Berg adjusters. These are then welded onto your beam fairly cheaply...around $30-$50 for a mechanic to do it. They allow your beam to be adjusted up to 4" for higher or lower riding height. The only offset is that they make your ride VERY bumpy. You will feel every little pebble that you drive over and I am not exaggerating. But that's a small price to pay for a slammin ride, right? They are available in both Link Pin (49-65) and Ball Joint (66-77).
Adjustable Front Beam
Adjustable beams are around $130-$160 and they allow you to lower your Volkswagen Beetle up to 5.5 inches with stock shocks, and up to 6.5 inches with short shocks. Adjustable beams still ride rough, but if you have the dropped spindles too it won't be that bad. I would also recommend getting caster shims and longer beam bolts if you go down real low. They are available in Link Pin (49-65) and Ball Joint (66-77).
They also have 2" Narrowed Adjustable Beams if you go down real low and need extra clearance for wheel turning.
If you REALLY want to olde skool it, fill up some sand bags and throw em in your trunk. Bags of dog food, bricks, and bags of cement also work good. Your gas mileage will be horrible, but if you're on a budget it's an excellent idea. And anytime you want to go back to stock height, just take them out. I actually know people who do this, so don't blow this idea off!
As for the rear end being lowered, that is just a simple procedure that includes rotating the torsion bars. How far they are rotated determines how low you want to go. You can get this done at an auto shop for around $70-$90. or if you want to do it yourself don't rotate more than 2 splines, it would be too low and you would bottom out after going over every little rock in the road. This is all I know about the rear end, if you want more info please contact your nearest VW mechanic.
If you lower your Volkswagen beetle over 2.5" you will have to get smaller tires in the front. 165's are stock, most people go for 135's. If you lower the back, get some 145's for the rear. Expect your front tires to rub the fenders when you turn, this is normal. If you go way down you should probably also get your beam narrowed so you'll be able to turn the front wheels. Again, I'm not sure of the procedure so contact your VW mechanic.