I'm not positive, but my best guess would be what you said up front and 6.5" speakers in the rear. Some of you out there with e46 cars can help you more there....
As far as MB Quarts go, they are a good speaker as is Infinity and PolkAudio. All of these are at similar price points. Adding new speakers and a subwoofer are great, but without replacing your existing head unit, you are doing yourself a serious injustice. Your factory amplification will not be sufficient for aftermarket speakers, and the signal sent to the amp (for your sub) will not be very clean.
It will all work, and you will think it sounds much better than oem, but keep in mind adding even a very cheap inexpensive aftermarket deck will improve the overall sound IMMENSELY!
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