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I had a 2008 335i with Steptronic and Sport Package and I traded that in for my current 2011 135i with DCT and M Sport Package.
Ride quality: The 1 is significantly smaller and lighter so it is more fun to toss around in tight turns in the city and feels more agile. Not sure if it is actually faster but it feels like it is. The only negatives with the 1 is the jittery tail over uneven surfaces (most blame the soft rear subframe bushings) and the 1 seems less stable at high speeds (over 80 mph on the Autobahn). Overall, the 1 feels like it is tuned to be more aggressive (the suspension tuning and the louder exhaust) and it feels like the car is asking you to drive it harder. The 3 has a longer wheelbase so it definitely feels more stable and composed at high speeds but it is definitely bigger all around and it feels that way too. Overall, the 3 seems more relaxed.
Interior space: The front seat space are pretty comparable. The 1 is marginally smaller but it is barely noticeable for me. The rear seat and trunk space is definitely smaller on the 1 though, not surprisingly. If you never plan to have people in the back like me, then this is a non issue.
Interior quality: The 1 definitely has lower quality interior trim pieces and materials. It is not horrible but definitely lower grade than the 3. It really depends on what you choose to compare it to. If you compare the 1 to other sporty cars like the 350Z, Mustang, Camaro, Genesis Coupe, EVO, STI, etc then it ranks pretty high in this segment. However, if you compare the 1 to other entry-level luxury cars like the ES350/GS350, G37, C300, A4, etc then it ranks pretty low in that segment.
Audio system: The 3 had a 13-speaker Logic7 system standard at that time. When I ordered the 1, the base system was very base so I had to upgrade to the 10-speaker HK system, it still has to the two underseat subwoofers but is missing the woofers on center dash speaker and the two in the rear. It is a noticeable difference but not game changing.
Overall, I would say the 3 is a luxury car that happens to be kind of sporty and the 1 is a sporty car that happens to be kind of luxury.
Personal opinion, I like the 1 better because it fits me better size-wise (I am only 5'7") so I like the compactness and the suspension and exhaust tuning matches my aggressive driving style better.
Good luck!
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