Much cheaper? It starts about 5g less then the M3... It is FAR closer to an M3 in terms of pricing then a 335 and an S5...
Performance wise the 335i is probably a little better then an S5, so an M3 will obviously blow it out of the water.... However Audi's have won many people over with styling and other characteristics.
Me Id prolly still take the 335 over an S5.