But the new Touareg doesn't have Air suspension and less offroad capable, and I do need one for good towing, I guess both would do anyways, but air would help.

 

Well I guess a facelifted touareg tdi with air could suffice. It will certainly get better mileage than a cayenne. The cayenne will put a bigger smile on your face but your 997 probably is good for that. Turbo cayennes are more fun than one would expect. Whereas a last gen touareg is numb but will definitely make an adequate tow rig. Have you considered jeep cherokee, ML, or BMW diesels with air? If fuel economy is not terribly important get a used turbo. If you want close to new get a touareg and live without the air.. just run 18's. I had a 1999 ML430 with steel springs and it did great for towing... so you may be able to live without it.