Alinawaz83 I've faced a similar dilemma as yours and I got the engine replaced with 1.3ltr. So if you're happy with with 1kr then go for head replacement cause the overhauling is not for this engine. By design Toyota has made this engines disposable so I won't suggest overhauling. For more info do visit yarisworld.com
Replacement of head assembly is cheaper as opposed to complete engine replacement. Best of luck