Check the coolant for traces of oil and also sniff the coolant tank. You will be able to smell the oil and combustion gasses in there. Check the underside of the oil filler cap for traces of white mayonaise. Those are the main signs of head gasket failure although be aware that mayonaise will be present anyway if the car is used mainly for short trips.
I've just replaced the head gasket on a friends 1.2 mk1 and the total bill was £110. That was for gasket kit, head bolts, cambelt kit, oil, coolant and a head skim. Its fairly straightforward if you have a decent tool kit.