Did the Vanos seals on my '01 325 Scott, and I still get the cold-weather surging occasionally. I think it's more lazy ICV than vanos seals. Can't really say that the seals evened out the idle, but they seemed to even out the low-medium throttle response. Also check for a tight-fitting DISA valve; the seal is known to leak on that, which would bring in unmetered air, further complicating the ICV issues, especially when cold and more gaps due to seal-shrink.
As for the temp needle, my guess is that it's getting stuck out there when the engine goes into the wild swings and the cluster goes to the engine off/switch on gauge test. 'bout all I could come up with there.