My 2 cents...
I had an early '08 135i and I like the 1M. I even had my name on a list before the 1M was official announced.
Everything the 135i lacked (forget power), the M3 had. Better seats, better suspension, better interior materials, more room, etc. Of course you also pay for this. That being said, I went with the M3.
Both are great cars, but they target different groups.