I would say that the difference is huge, and it's also subjective. You're going to find people who will say the e36 is 1000x times better than the e46, vice versa, and even some who will bring up the e30 as being the pinnacle (Which I think it is).
Basic differences:
Engine - e46 (got re-updated engines in 2001 (Am I off by a year someone?) They went from e36 having a 1.8L(318), 2.3L(323), 2.5L(325), 2.8L(328), 3.0L (M3).
Aesthetics: the e46s have (IMO) nicer leather, better layout more modern lines, nicer exhaust tones, better seat comfort.
I believe the e46 will have better traction control than an e36, but I'm not 100% sure.
I have notice that it seems that most people tend to have less massive problems with e36 than with the e46.
Suspension wise, I have driven a 2004 Mach I in the rain, around a bend, and on a bumpy road. So I think even a toyota camry would feel like a large improvement. I'm not really sure what your asking about suspension, but I hope that answers it.
That's all I can think of right now, however, I will make a suggestion.
BY your comments and your interests, I think a e46 M3 would be your car of choice. You can definitely track that car and have alot of fun. BUt I do not have first hand experience with an M3, so take what I say very lightly.
Good Luck, and welcome to the board!
Sean