I've owned 3 different 3 series cars (including one M3
), an X5
, a 2008 550, and I currently have 1993 850ci and a 6 month old 2011 7 series (I also spent a week driving a Hertz rental 320d touring around Portugal last year). So, I think I can speak about BMWs from some experience.
To your question regarding the differences between the 3 and 5, the answer given by Fy2HMO above, although somewhat sarcastic, was pretty much right on. Prior to the introduction of the new 5 series last year, I would have said that the 5 felt much more related to the 3 than the 7. The new 5, however, shares its platform and much of its running gear with the new 7 series. As a result, the 5 is now a significantly larger and more comfortable car than the 3 series, and as Fly2 said, they are now vastly different. Somewhere in the update a lot of the former sporting nature of the 5 has been dulled by its increase in size and weight (although it still handles and performs in a much sportier manner than its competitors from Mercedes and Lexus in my opinion based on having driven a new 535i, an E350 and a GS350 back to back on an autocross track last summer). On the bright side, the 5 is now really an eight tenths 7 series. So, for a substantial discount from the price of a 7, you can drive the 5 and not feel like you are giving up much to the 7. The new relationship between the 5 and 7 has also allowed the 5 to be equipped with luxuries formerly exclusive to the 7, which are not available at any price on a US spec 3 series (things such as dynamic/adjustable suspension, heads-up display, night vision, adaptive cruise, soft close doors, power trunk lid, ventilated seats, and so forth). Additionally, the 5 series now uses a new 8 speed automatic, while I believe the 3 still carries on with the older 6 speed. So, while the turbo gasoline motor may be the shared by the 335i and 535i, the entire drive train is not. Of course, I think the biggest difference for your consideration is the fact that there is not currently a 5 series with a diesel available in the US. So, if you have your heart set on an oil burner, you can have a 3 series or an X5
One thing to note, the current 3 series is in its twilight years and is scheduled to be replaced, I believe for model year 2013. From what I have seen in the BMWCCA magazine, the new 3 will also grow larger and look much like the new 5. I'm guessing that means it will be heavier as well.