Pretty much ditto what most of you said...
I have a 2011 135i M-Sport and have gotten, "That's the lowest BMW, right?" or "Why didn't you just get the 335i?".
My previous car was a 2008 335i Sport that I traded in for the 2011 135i M-Sport and I considered it an upgrade in all aspects of performance, albeit a slight downgrade in comfort, luxury and size, which I was more than happy to sacrifice. So obviously, I could have bought another 335i but i found the 135i way more enjoyable. Even still, I got a lot of "Isn't that a downgrade from your 335i?"
For the car-ignorant, I just respond with "Yup, it is downgraded." because they won't understand how the 1 is better simply because its slotted lower in the BMW hierarchy and is priced lower (barely) no matter how you explain the lower weight, compact size, 7 speed DCT, big Brembos, same engine and wheel/tire sizes as the bigger/heavier 335i, etc.