Both the M550i and the M340i are geared for luxury, but at a different price point. Obviously, the M340i is cheaper, but I find it acceptable in its price range. I have some issues with the button placement and design, but with all the boxes checked, you will have some nice tech and a cabin that is pleasant to sit in.
If you are cross shopping the $80k M550i you should also consider the X3M Competition. I have driven both the M340i, M550i, M5, X3M Competition, and M850i. The most surprising was the X3M Competition in BOTH luxury and straight line performance. It's an absolute beast. The interior is closer to the M550i in terms of quality and design, but it's an actual M car which means it gets all the bells and whistles that stand out above the M Performance versions. The M5 and X3 Competition have very similar interiors:
X3M Competition:
M5 Competitoin:
More pics I took of the XM3 Competition:
The X3M Competition is not only faster, but nicer inside than the M340i for good reason, it simply costs more. The caveat is that it's a SAV, and not a sedan, but surprisingly, the X3M Comp handles very very well. The stiffer suspension and lower CG is what makes the M340i handle the way it does, which was quite impressive when I took it through the autocross. However, if you want a soft cushy ride, the M340i isn't going to give you that and the interior is a step down from both the M550i and X3M C.