Like toady, I cross-shopped the GTI and the 128i, though the only 1-series models I got to drive were both 135is. It was ultimately a tough decision, but I'll give some of my thoughts of the subject, in case they happen to be relevant.
First off, the interiors. I found the GTI's to have a nicer look and feel to it, though both were very high quality interiors, and certainly better than anything Japanese in this price range. The seats were very comfortable in both, with maybe a barely perceptible edge to the BMW in comfort, though the GTI's looked a lot better.
Premium stereo for premium stereo, the GTI has a huge lead there, which was a fairly big deal to me.
Exteriors are pretty subjective, but I like the 1-series a little more. I've never been a big hatchback fan; I'm still not, honestly. But the GTI does something for me. The 1-series does a little bit more, especially considering that it's available in coupe form. And though I realize I'm in the minority, I think the 1-series coupe looks a million times better than the current 3-series coupe (which looks friggin' huge in person, and ill-proportioned). Even with the preggers' belly of the 1, it still looks better than the 3.
The most important aspect of a car for an enthusiast is how it drives, and here's where it got weird for me. The 135i was definitely the faster car, but fun isn't always fast, and faster isn't always more fun. The GTI's chassis and suspension felt a little more playful to me, and didn't sacrifice ride comfort to do so. And this is coming from someone who's always been a huge RWD fan. I vowed that after graduating college, getting a job, and having the lease on my Impreza ending, I'd get another RWD car (my first car was a 240SX), but the GTI changed my mind here.
As for your current situation, if it were me, it wouldn't even be a decision, because I can't do used cars unless they're immaculate, and I do mean immaculate. If it were new vs. new at the same price, it'd still be a tough decision for me, even with the surplus of power in the 135i. Once you take the price differential into account, the GTI takes a huge lead in grins per dollar, in my book.
All of that said, the 1-series is my favorite of the current BMWs, by far. I wasn't even alive when the 2002 was new, but I think the 1-series will be analogous to the 2002 for my generation. I'd take a 135i with a LSD (hell, even a 128i with a LSD) over the E90 M3--and a pristine E30 M3 over both of them, hah. :drool: