I own a `98 c230 and a `03 c240, both times I tested the equivalent 3 series before buying the Mercedes. BMW's are fine cars no doubt, when purchasing the `98 c230 the latest version of the three series was a few months away from being released, so I went with the Benz which had a few more years with it's 202 body style..
When looking at the `02's I felt the Mercedes C was a more modern car than the 3 series. The Mercedes interior fit's my 5'10" frame perfectly, the Benz interior is more modern and airy in my opinion that the 3-series.
The nice things about the Benz, rides very quiet, very little wind noise at legal cruising speed -Conti tires. The slap shift method of forward gear change in the automatic is a nice feature. The car steering is excellent at high speed driving on the highway, brakes are very strong at repeated high speed braking, and at the highest speeds hard usage of the brakes doesn't lift the rear very much. In the rain when going through bends the steering loads up very nicely and when it suddenly goes lite as traction fades things are never scary. There are many more positve aspects to the C, trunk space, dash display multi-function from steering wheel is nice.
The bad points of the C: door trim plastic and buttons must be better, radio is no Marl Levinson, engines are a step down from the smooth inline BMW six - but the Benz is a nice cruiser engine, just not the best instrument for going up and down through the rpm's as if being on a closed road course.
The C-class is getting a minor make over in 2004 - I think that is what I read.
Note: there was a recall on some `02- `03 M3's, new crank bearings and oil pump, on a $55K plus new car is a bummer.