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Like most things in life, it's a mixed bag. The big gripe about the E46 over the E36 was it's size and weight, but to me the E46 was a solid advance in pretty much every area - comfort, safety, handling, build quality, ergonomics. The E90 is less clear-cut, because the change to RFTs and electric-assist steering make the driving dynamics inferior, while the other areas are pretty similar. I don't feel like you get a lot for the compromises when going from E46 to E90.
It's different for the Z3/Z4. Driving two generations of the same model, I hear a lot of nostalgic, dreamy-eyed owners that say the Z3 is better than the Z4, but to me the standard Z4 loses out only in steering feel (also due to EPS) and the lousy run-flats, while the chassis/handling dynamics, comfort, and performance are a strong step forward with much more improvement in moving from E36/7 to E85.
Where I would take an E46 330i over an E90 330i and not feel I was losing out, I'd take an E85 Z4 3.0i over an Z3 3.0i and swap out the run-flats because the improvements to the newer car are worth it (actually, that is what I did - after test driving both I bought a Z4 and added Goodyear F1s).
With my current stable, my Z4 M Coupe, with hydraulic steering and conventional tires, feels 2 generations newer than my Z3 Coupe - more solid, more comfortable, better quality materials inside pretty much everywhere. I like my Z3, but it gives off a strong mid-80s vibe in terms of interior quality/design and handling dynamics - and it was built in 2000! The Z4MC feels thoroughly modern, even 3 years after production ended. You can, as many do, blame the Z3's use of an E30-derived suspension, but the Z4Ms use an E36-derived front suspension.
And all that sets aside the subjective opinions of appearance.
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