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The '07 328i is a lots of fun to drive, has a pleasant ride your family will love, has more than adequate power, and offers phenomenal value. My 77 yr old father comes back grinning every time he drives his 328xi wagon. To me his would be perfect if it had a stick.
My brother bought an '06 330xi (~$25k, well optioned, 30k mi) last October after selling me his '02 S. He really enjoys it, but still misses the box a bit, and his wife, a long time Civic driver who "doesn't care about cars," is absolutely gaga over it. She now wants a 3 series wagon.
I couldn't feel much difference in power between the 330 and 328, so I'd go for the 328 to save a few bucks.
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