I started the sti vs m3 thread a while back. Let me start by saying my STi has been the hugest pile of crap. It is on it's 4'th engine (it was just lemoned, all my money back yaay!). The stock suspension is wobbly and unsure, the steering is lifeless, it pulls like it's dyno graphs are the rocky mountains and it rattles like you cant believe. Do not buy one.
With all that said, when this car is gone I will dearly miss it. It gets under your skin. It has the intangibles and soul and character. On anything twisty it is a monster. In the real world, it is seriously fast. It has so much grip, it is really forgiving, and the awd makes the condition of the surface irrelevant. I have handed many m3's their lunch on the canyons. If you push through all the body roll there is seemingly unlimited grip and w/ swaybars and some trail braking it is perfectly neutral and will rotate at will. Up to 60 the sti's will stay even w/ the m3, and even the m5. After that it will fall back like you threw a piece of paper out of your window.
A couple of mods on an STi can very easily make it pull on an m3 at lower speeds. But as many people have said, the m3 is a different class. The sounds, how things feel to the touch, stuff like that is on another level. I just HATE it when m3 owners get on their high horses and act like on a purely performance level an m3 vs sti comparo is not even worth a discussion.
One last note, I am in the market for a car due to my subie being bought back, and guess what I'm searching for..... An e46 m3