Yes, SMG is crappy on the E46 M3, many problems especially bought used and past maintenance. Not only that, but the shifting technology is dated, noticeably clunky vs. DCT, and slower. Get a 6MT if anything. Do a quick search on
http://forum.e46fanatics.com/. In general, the E46 M is high maintenance car past 60,000 miles.
Otherwise, I think the E46 M3 is the best looking M in history to-date, wish it wasn't so expensive to keep.