I've had both probably at least twice, and both cracking cars but as said also both offer something different.
Running a E46 M3 does require deep pockets, and even more so now with the SMG boxes failing costing 4-5K, the Vanos even on the E46 go now, and the rear chassis are all going costing big bucks to sort properly, rear springs that snap often, as well as disks pads etc, and all other consumables which demand a premium for what was a 55K super saloon at the time.. But in return you do get a very well built, solid car with fantastic grunt, handling and all round performance that driven in anger with experience could keep up with the most exotic and powerful cars.
The M3 doesn't have the punch of the turbo, but they just sing when you start pushing them over 5.5K up to 7.5K+. Drop at least 2 cogs when you want to press on and it comes alive. A bit like a Vtec they are at the best being ragged... but still lively in the lower enough in the ranges as well. I didn't like the manual version as they were a bit agricultural with a long throw, heavy clutch. But the SMG version working as it should is superb bit of kit.. A M3 would be happy blasting down the Autobarn at 150+mph, or round a track and won't overheat, blown a turbo, piston ring, etc,etc and be able to do it all day long..
The STI can make the worst of drivers look good, and is probably the best point to point UK road car money can buy, with relatively cheap running costs, and reliable if left more or less standard, and will tend to keep most average drivers out of the ditch when pressing on hard.
The M3 is more understated, less shouty and carries less of the stereotypical image that the scoob gives. But they are both 'hooligans' cars now and within reach of most people.
Both great cars, and based on them both being out of the box standard, and if overall running costs were not a factor then I personally think the SMG M3 is the much better car for the more discerning person.
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