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Crazylegs, you can't say that the N54 is the better engine, because the actual engine itself is not better or worse. Sure, the N54's stock turbo's will produce more power than the N55's stock turbo can, but that has nothing to do with the engine's internals and technology used. You have to take your head out of the "tuneability" aspect of things, because comparing a 5-6 year old engine that's had an ample amount of R&D time, to an engine that hasn't even been out for 2 years yet is pointless. In fact, i'd venture to say that the N55's progress in 1 1/2 years has been much higher than the N54's progress that was made in the first 1 1/2 years of the N54.
Juiced46's points about the internals is correct: no N54 ever produced has had forged pistons. I have an N54 and am saying this, so I don't really have anything to gain. The N55 is FAR from being a bad motor, and it's going to be used in the next M3 as Juiced stated.
The reason they used the N54 in the 335iS and the 1M is to get rid of their inventory. It's much easier for BMW to market the older N54 in a "premium" model to increase their profits (ripping people off by essentially flashing a Dinan tune and adding M-Sport), getting rid of their motor supply at the same time. If I were a car manufacture, I would do the same excact thing, instead of throwing out inventory. You have to look at it from a business perspective: we are talking about mass-marketed 3 series BMW's, so there's going to be alot of inventory.
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