I think the concern here is based off of budget and value for your money.
Obviously M3 > 335is no questions asked.
Which should you go for?
I don't know.
I sorta have the same question for myself.
Here is the way how I see it...
M3 = V8 = huge plus (probably never will be another M3 w/V8 in the future), so if you want a V8, this is your last chance basically. check out my thread...
If you don't race seriously or go to the track etc., but want power,
then I say save your money and use it for something else right now that is more valuable (you are a college student... UCLA? judging by your username. I'm sure you need all the money you can save.) and settle for a 335is.
That's how I am starting to think now. I might just buy a 335is around June (see my thread and you will understand) and do some mods to make it a little faster and unique (mostly cosmetic). I was thinking and decided my money would be better spent in other investments at the time being for me. I honesty am lost myself. Maybe I should just buy my 328 when the lease is up.
Also, I personally would rather have a new car VS old car, but it depends on you. There is about a 100hp diff between M3 and 335is, but from what I hear you can easily make the 335 faster by chipping it and doing mods (which I think totals out to be less than the M3). From financial standpoint, I think 335is wins.
Ultimately, it is really up to your personal preference; sacrifice more in spending in other things (clothes, housing, food, etc.) or in your car. And as mentioned above, you have to factor in insurance and gas. I honestly think a 335is is fine for you, although I'm sure you (AND SO DO I!!!) really want the M3 title. It just doesn't work out financially atm.
So choose wisely and good luck!
Let us know your decision! I'm curious to hear.
I was thinking about it some more actually and to me if you want to get the 335is, you might as well go for the M3 if you are going to spend all that money. The difference is huge apparently. Personally, I will be in a similar situation as you soon and I don't think it is even worth spending all that money (esp if you don't really have it or have to make great strides to save up for it). Settle for a 328i coupé with M Sport and other nice options (like me) and use it to fuel you to work hard in life and be able to afford an M3 hopefully soon!