Lambda sensor is used in a closed loop (auto-regulating if you like) system. Coupled with information from other sensor inputs it can improve the efficiency of the system by varying the fuel injector output (to suit the air mixture, temperature etc) and thus reducing the amounts of unburned fuel and thus emissions in to the atmosphere.
Without the sensor in the system the system works on an open loop (pre-determined) fuelling map whereby the amount of fuel delivered by the injectors depends on the throttle position, engine speed, knock sensor and engine temperature (plus others).
All 964s use the open-loop until the Lambda sensor has reached operating temperature. Cold starting issues are therefore unlikely (almost never) due to the Lamda sensor.
Remember that the Lamda (oxygen) sensor is in the exhaust and so can not measure the air intake or fuel intake of the engine. Just the by-products of combustion. The engine relies on it's management system and inputs from other sensors, as well as the Lamda sensor, to help control engine fuelling.
So in summary. Yes Lambda sensor system is more economical (and green) than the M150 option. However, M150 allowed the cars to run on poor quality fuel or leaded fuel without causing expensive damage to a catalytic converter.
I do not think that we are talking a huge difference in fuel economy here. I believe it is easy to retro-fit a Lambda sensor to the M150 optioned 964. Although it requires a cat(or cat-bypass) pipe with an Oxygen sensor screw fitting and the removal of a jumper pin from the engine management system.
Also, with the throttle wide open (pedal to the metal) everyones engine is running via the OPEN LOOP fuelling map. So there is no detriment (difference) to performance with either system under hard acceleration.
So for the cost (Lamda sensor from Porsche ~ £120ish and Cat/Cat bypass from ebay ~ £100-200 second hand or ~£350-400 new, plus labour unless DIY) I would spend the money on something else like fuel!
Hope this is helpful.
