i personally prefer Audi's
i have a TT and it feels really nice on the road, especially handling in wet weather conditions, not sure about the BMWs though but you could check out some reviews.
Nah, M3 is far more track focussed whereas the S5 is more grand tourer.
I really liked the S5 and now that the 3 series is due to be replaced, I'd be reluctant to recommend it. That being said if it was my money/budget, I'd go 335i coupe over the S5 since it'd be more affordable and IMO looks just as good.