K&N 57i is a pretty pants induction option on the Stilo in my opinion as are similar options from Pipercross and the like. If you look at the fitting guide, the cone basically just goes in the end of the original induction pipe where the airbox would go - basically the cone sits on top of the exhaust manifold and out of the way of the original gap for the air feed.
I went down the custom route...
...though it's a tad involved. Far cheaper than getting something like a GSR (if you can get one) or the other best option - a BMC CDA, which still requires some customisation for the best positioning anyway.
Exhaust too, I got a custom cat-back system for £300, which is the going rate. Can I believe get a sports-cat manifold as well to make sure it gets through MOTs and that'll come in about £350. As said, there's other things you can do, but the ones Yellow Peril and myself have listed are the easiest and most cost effective really.
As said, the 1.4 (which is basically the same as my 1.2 bar an extra 15hp as standard) will never be the fastest of cars. However, most passengers in mine are surprised when I tell them it's a 1.2, though I'm not sure if that's down to the mods or the way I drive
I think the best thing you can do as well as exhaust and induction is really handling. Decent springs and dampers will transform the way it drives meaning you can carry more speed through corners and have in essence a faster car. If you know how to drive properly of course