I'd say if you didn't go with another S, you might be a little disappointed in the engine performance, although a car with less miles might be more appealing.
Will it be a daily driver? If so, I'd go with the lower mileage car. Weekend or fun/track car? Get the S. (of course, if either one you choose passes a PPI)
I have driven a Z4 (not the M), and it was fun, and pretty quick. Handled very well, and I liked the way the brakes felt. I bring up this car, because it's notably more stiff than the Z3. Test driving one couldn't hurt, tho.
As for the PSM, my Boxster doesn't have it, and I haven't driven one that does, so I couldn't comment. Might come into the decision depending on your intended use of the vehicle.
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2001 Boxster - Grey on Grey
1969 911T Targa - 'Stinky'
http://www.zoto.com/frayadjacent/img...f27a-4a399.jpg <---- my car. ^ crap I post.
"The existence of the flamethrower is evidence that someone, somewhere once said 'I want to set those people over there on fire, but I don't want to have to walk over there to do it.'"
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