My previous car before purchasing my 997 was an E46 M3 with SMG. It is a fantastic car that both handles and looks great. I have no reservations about the car, when it is was on...it was really on!.....Jaw dropping performance! Unfortunately though, I had a 2002 model (first year of SMG) and my engine suffered 4 dead stops while in motion due to faulty engine coils. It was declared a saftey issue by BMW attorneys 30 mins before arbitration began. But other than the problems, I think that the M3 is an extremely aggressive car with an even deadlier transmission (really does shift gears in less that 80ms).
But in defense of my current vehicle.....what can I say? It's a Porsche! and a FANTASTIC one at that! If you're after performance, I feel that both are (driving wise) involving vehicles but the Porsche at times feels more rewarding. Futhermore, it's a serious car, no matter how many luxuries you put in it, you can always feel the racing history behind it. In my opinion, it's a great feeling to drive what many people call the definitive sports car.
Also, Porsches atleast here in the states tend to hold their resale value much better than M3s, not to mention that they turn more heads!
They're both great cars.......my suggestion: FLIP A COIN!

Cheers!
Ray