@ChocolateLab: Yeah, honestly the 128i is an absolute blast... though make sure it's got the sport suspension and a stick! The auto in the 128i is good, but far from great (same as the last gen 3-series) but it loses a lot of its perceived power through that torque converter!
The 135i is a step up, no bones about it. It's fast... sometimes scary fast. It can get you in trouble REALLY quick on any stretch of highway and has enough power to shred those expensive run-flats in no time flat. But it's also a phenomenal highway cruiser. I guess it depends a lot on the way you drive; if most of your driving is cruising at 60-70 on the superslab then both cars are a dead heat... they'll both do the job fantastically well and the only benefit you'll gain with the turbo is the passing power. For the record; the 135i pulls like a freight train anywhere over 2000rpm, so you even have ample passing power in 7th on the DCT.
Now reliability? Well, the N54 (pre 2010 I think) has the old twin turbo which had the well documented problems. They have an extended warranty on the HPFP to 120K miles as I recall... more than enough in my opinion. The N55 went to the twin-scroll single turbo and as far as reliability so far I think it's been rock solid. I haven't seen any more reports of problems than you would expect to see out of any production run of cars; a few lemons here and there but in no way indicative of a widespread problem. Having said that, some people prefer the feel of the N54 to the N55.
But the suspension mods made in 2011 model year are far more important in my opinion. I drove a 2010 135i and didn't like the way it felt. It accelerated great but I didn't connect with it at all. However, when I drove a 2011 it was like a totally different car. The modifications are small, but very significant. If you get a 2010 or earlier you might want to research suspension mods.
For my part, I love the car. I would've been just as happy with a 128i, but only with a stick. Part of the reason I spent the extra was for the DCT because I don't like autos and was having some knee trouble at the time (which has since been resolved... maybe the next car will have a real clutch again!)
2001 E46 BMW 330i Sport Package 6MT
2004 BMW R1150GS
2004 E60 BMW 545i Sport 6MT
2012 BMW 135i - Deep Sea Blue / Terracotta / DCT
2012 BMW K1600GT - Vermillion Red Metallic
2008 BMW E90 M3 - Interlagos Blue / Silver / 6MT