The BMW M team was all about high revving motors and had followed Ferrari's V8 very closely. Maybe the pressure from AMG's E63 (V8 bi-turbo) and Audi's RS6 (V10 bi-turbo) were just too much for the M team to beat with the new M5 if it was kept NA. The decision to turbo charge the M5 made it's way to the new M3 as well.
The E92 M3's V8 is not quite as great as Ferrari's V8, but it's damn close.
Current: E92 M3 DCT, Cayenne Turbo S, Ferrari F430 F1
Past:911 Turbo (996), C32 AMG, S2000, (E36) M3, Supra TT, MR2 Turbo