I just got mine (120i M Sports package). And I still can't find a solid reason to stay at home! Heheh
There's an article published not so long ago entitled Vergleich BMW 1er gegen 3er - Wer ist der bessere Breitensportler? (Comparison between the 1er and 3er: Which is the best Sportsman?) at autobild.de you might wanna have a look at (Sorry its in German). It basically compares the 1er and the 3er. The conclusion is that both cars are not comparable as they are in leagues of their own. The only two factors that can help you decide between the two are trunk space and rear passenger leg-room. Other than that, they are absolute beauties! Good luck!
AFAIK, the 118i and 120i share the same engine (2.0 liter engine). However, the 118i is detuned to give 129hp (on paper) compared to 150hp for the 120i...