I bought a 120D M Sport as my sensible car after having an E46 330D. I knew it wouldn't be as smooth but I didn't think it would be that bad. After a succession of bits of trim falling off, which the stealer failed to put right, the ride was awful, even after ditching the rfts, paint flaked, I was so irritated by it I got rid. On paper, ideal for me, in practice, a huge disappointment. A friend's Golf 130TDi went better.
Have a look at what else you can get for the money too. Bet you'd get a lot of 3 Series for the same money, as was said. For the same price as my ex demo 3 month old 120d, medium spec, I got an 11 month old medium spec TT 3.2 Quattro. Granted, I've got to know the girls in the petrol station a bit better :roll: but so far nothing's fallen off and it's quite fun (thugh not as good as a Z4 IMO)