The recall was issued due to the specific Volkswagen New Beetle not complying with new crash barrier safety regulations which were introduced on September 1, 2010.
As these vehicles do not pass the new regulations, and were made within the specific dates put out by governing bodies, Volkswagen apparently has no other option than to offer an exchange Volkswagen New Beetle to the owners that was made before September 1.
Basically, Volkswagen is asking owners to swap their cars for an older model which also fails the crash barrier requirements, but at least it complies with government standards set during that time.
This kind of thing would happen fairly regularly, although, on a smaller scale where owners are not asked to exchange their entire vehicle. Oh well, perhaps you weren't happy with that colour anyway.