Last I heard or read the next M3 will have a larger inline 6 good for about 300-350HP and plenty of torque. The 6-speed should be included as well as the new E46 chassis should allow the 6-speed tranny to fit without hacking it to death. BMW has had a SMG gearbox for awhile in Europe. Whether they send over the true sequential gearbox or a electronically controlled automatic (like Tiptronic, Steptronic, etc) remains to be seen.

I doubt MB will vary from the habit of using the 722.6 5-speed automatic. Even in the concept only SLR they are using a 5-speed automatic. Most people can't drive a stick faster 10 out of 10 times, but there always is the "fun factor". I think the market of "must have manuals" (especially in E-class/5-series size cars) is small enough these days that MB is content to let BMW have those folks.

Horsepower wars are a good thing...Lee