The 1 series definitely is smaller.. the front seats have the same amount of headroom which may be what you are feeling. But otherwise everything is closer in to the passengers than on the 3 series.
But I do understand what you mean when you say the 3 series is too large. It is. The 1 series is the same size as the E46 3 series which was a good size for a compact sports coupe. The current 3 series is definitely larger... and the new F3x are huge.