This sounds like a common problem. It is more than likely your carrier linkage (located just behind the battery on the transmission) check the cables that connect their, one of them is broke off I'll bet. The linkage is like 34 bucks at your dealer and its not a hard fix at all. I had to replace mine twice in the first 5 years I've had my beetle. I also posted a thread on here as to how I finely fixed mine for good but it's not factory and may void a warranty if your beetle is newer (mine is a 99 I bought in 99) and warranty is long gone. If yours is newer i suggest just getting the correct part and installing it. This may happen again in a few years as these are prone to wearing out. Hope this helps.
The carrier you will lose all but 3rd and 4th (I had it happen to me last year). If they still have 2nd, I'd lean more to a linkage issue. It also depends on the year of the car in question. Only 98 and 99 NBs had this problem, as its sort of a hybrid setup from the Mk3 cars.