I recently purchased a 2006 Scion xA with the 1.5L Engine. I have been told that if I swap out the stock air filter for a K&N Air Filter, the air conditioner will provide more air - True or False?

Also, what can I use do to hop up this engine without voiding the warranty?

 

Okay, let me answer your questions and then point you in the right direction here.
Yes, the K&N will give you an increase in airflow. It's not mind blowing though.
No, that will not 'void' your warranty.

In fact, nothing 'voids' your warranty. If an aftermarket part is installed and it is PROVEN to result in a failure, the dealer will not warranty the failure. The rest of the warranty remains in tact. For instance, if you install a cold air intake, you still have your warranty. If you drive through a lake and the intake sucks water into your engine and you throw a rod or hydrolock the engine, the intake directly resulted in the failure, so you're not covered.

Go search for the Magnuson-Moss Warranty Act. It will answer your warranty questions.

On the topic of searching. There's rarely a question that you will have that has not already been addressed countless times here. Use the search feature and you'll probably find a ton of knowledge and answers.

Good luck and congrats on the buy!