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I came out of an E60 550 sport and went into a current model M3 sedan. You do give up a bit of room and comfort going to the M3, BUT, there is no comparison what-so-ever in the smiles-per-mile department. The M3 is a fabulous car, and you will not regret getting one. Steers like a go-kart, the suspension is perfectly balanced and NEVER gets out of shape, and the engine is absolutely sublime in a way no new turbo M will ever be.
I've got the stick, and the car is just a total blast to drive. I also think it looks a whole lot nicer than the new 5 also. I test drove the new 535. Didn't handle or steer as well as an E350.
The only bad thing about gettin the M is that you will be spoiled. Its hard to go back to driving a normal car.
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