hi rubes, like yourself, i have an E36 328. I've driven several types of e46, from the 318, to the 330. firstly, the e46 is basically a newer car, i wouldnt say so much in terms of radical mechanical changes, but more so on the electronic side.
mechanically, its very similar to the e36. chassis stiffness is of course improved, as has crash safety...etc.
Build quality has of course been improved, refinement..etc. Basically, the e46 to me, has a softer feel about it. quieter, smoother, and feels somewhat, "lighter".
space wise, is only ever so slightly bigger than the e36.
handling and performance, shouldn't really differ much, but all that refinement seems to make the e46 seem easier to drive hard. coming from a 328, you'd probably want a 330 to get that same feeling of seamless torque. One big thing is of course drivetrain. the newer gearboxes are definitely superior. But for driving hard, i prefer the e36. anyways.. this is my personal opinions only
reliability?? well.. hard to say la.. you already own a bmw, you should know la, some people have horror stories, some people have nothing but praise. very difficult to say.
for prices, best go get yourself a copy of motortrader, and also look at the prices in thestar, there are always lots of bmw listings, especially 3 series.
remember, its a buyers market now, never pay sticker price