I read this post with interest as I recently swapped my E86 M coupe for an E89 35is. I loved my M when I was in the mood, you just couldn't beat the sound, handling, power, looks and rawness - it was intoxicating. The trouble is, the opportunities to experience that, particularly living in London, were few and far between. Driving in traffic, on badly potholed roads with the backbreaking ride and heavy clutch used to grate on me after a while, and I started to feel like I needed to see a chiropractor and take a painkiller after a day of being in the car. Factoring in the cost of warrantys, tax, rear tyres e.t.c. just served to make it less attractive than when i bought it.
Some of you may know from the problems my 35is has had that it hasn't been smooth sailing for me since I switched, but even if my new car doesn't get fixed, I probably wouldn't get another M coupe. Yes the steering is a bit numb compared to the M, but I love the adjustability of the new car. It is easily as fast as my old M in a straight line, and I can cruise around in absolute comfort when I want to, or press a few buttons to lower the top and make the car handle better to suit my needs. It's also a bit cheaper on petrol and tax, and despite being worth more than my M it didn't do much to the insurance either. I am also a bit of a geek so love the new toys in the new car! Overall I can see that the new car is a lot easier to live with, and hopefully if mine gets fixed sometime soon, I can really see myself using it a LOT more, especially if this weather keeps up. Both are great cars, but they appeal in different ways.
If you are buying just to have a toy when the mood and roads suit, the M maybe perfect for you - I don't see you getting much better for the price they sell for these days.