When I was... a teenager, driving my first car (ye olde Honda CRV), my friend mentioned that he would drive his 1980s Sienna Toyota van around town just for the heck of it, or to do some errands, and finding ANY excuse to drive.

I was intrigued and curious because his car was a SUV and I thought that a car was a means to an end (to get from point A to point B with an objective in mind).

Now, fast forward a certain number of years, and I now totally understand his love for pure simple driving enjoyment with the RS5 back in late 2012 October (till May 2015).

The new S3 just surpasses this enjoyment factor by a small margin, but the important fact is that it DOES surpass the RS5 in the driving enjoyment category (if only by a small margin).

The S3 is a thrill to drive.

Echoing another's quote, the S3 is a pocket rocket.

It is both nimble AND fast.

It's a small, compact car, and gives you the power (and torque) when you need it in city driving.

I am finding a lot of excuses to go and drive this little car as much as possible.

So, without further ado, here are the pros and cons:

S3:

Pros:
1- Agile (changing lanes, turning, etc. is better)
2- Value compared to the RS5.
3- It's 4.4. for 0-60mph (roadandtrack.com)
4- The passenger headroom space is surprisingly very roomy and it has a little more headroom space than the S4 (I know right?), and the legroom between the S3 and S4 is very similar.
5- Gas!!! 40% lower cost than the RS5 and long-term wear-and-tear costs (brakes, rotors, etc.)
6- Mods - there are a lot of mods for much less money than the RS5... I can now tinker and mod a car myself and through auto shops.
7- It's a newer chassis and built on a newer platform (don't get me wrong, I'm not saying the S3 looks better than the RS5... both cars look WUNDERBAR in my opionion).
8- It has the Audi magnetic ride dampening system which makes it very comfortable to drive in any mode and road condition, and the Mag ride is only available on the new TT and the R8 and... the S3.
9- Faster loading MMI
10- LED headlights (always wanted LED headlights)
11- The DRL LEDs changing colour for left and right turn signals
12- the sunroof opens fully and is larger than the S4 sunroof.
13- Lower front dash allows for more viewing space ("larger" windshield)

Cons:
1- Understeer and the lower cost Haldex AWD system (which favours more power on the front-wheels to approximately 80%)
2- The seats, to the best of my knowledge, are either PVC "leather" or Vinyl leather, or low-grade leather (as compared to the RS5's better leather)
3- Incredibly small trunk
4- Less head room for the driver... anybody taller than 5 feet 11'' will JUST fit into the seat with very little room left-over.
5- The front DRL LEDs look incomplete... I very much prefer the RS5 DRL LEDs.
6- Some little things like not being able to lock the car using the rear doors, no seat adjustment memory keys, only 1 grocery hook,
7- Turbo! This is important because, even though the S3 turbo lag is very short, you can feel the lag, unlike the RS5. I also have a 2012 A6 which uses a supercharger instead of a turbo system, and the low end power on the A6 is phenomenal and is given whenever it is needed without lag. I only wish that the S3 also had a supercharger instead of a turbo system.
8- The S3 has a much narrower chassis than the RS5. The RS5 has that widebody look (figuratively and literally) that I love.
9- 0-60 at 4.4 seconds is still slower than the RS5's 0-60 at 3.9 seconds (Caranddriver.com)

Conclusion:

The S3 offers a lot for such a small package.

The mods are numerous and are quite cost effective.

The RS5 is more like a weekend car for highway driving than a daily car for city driving.

The S3 is for thrilling and fun-filled city driving, but gives you a some fun on highway too (albeit not as much as the RS5).