I have a 98 323is. I love it. If I take a turn too hard, I slide rather latterally unless I have traction control and spin the tires, then I'd go into a drift. It comes with a stock open differential, so drifting is rather hard unless you WANT to, or its really wet outside and you have little to no tread left (like today... Man, that's as far wide as I have ever been without doing a 180 or 270)
It handles REALLY well. I can only imagine what an M would be like.
If you can, get a manual transmission. I have the auto and you always loose some horsepower when all your power goes through a torque converter. The locking mechanism is prone to weakening and not locking as often and soon as normal. (well, at least I hear a whole lot about it in the E36 thread with people who have autos, along with my experience.) This isn't bad, it just translates to you never see the last 10-15 horses from your eneigne. Read up on how torque converters in automatic transmissions work to see what I'm talking about. No big deal.
If you want some more juice, lok at a 328, if you just want a drivers car, a 323 will work fine.