Perhaps some of the more experienced guys on here who might have/do own a BMW can comment on if and why they prefer the Golf? I've driven BMWs, but never owned one so my opinion isn't worth much!
Firstly "Welcome" Marcus... Hope we're gonna see a lot more posts from you on here, as opposed to on the babybmw.net forum. Secondly this topic has been discussed extensively on another thread and may give you the answers that you are looking for.
http://www.golfgtiforum.co.uk/index.php?topic=253305.0Without going into too much detail, I was in a similar predicament to you. I currently own both a Mk6 Golf GTi and a BMW E60 M5 and have also been fortunate to test drive both the BMW M135i and new MK7 Golf GTi (minus the Performance Pack). So to answer some of your questions:
Q1 Why should I go for the GTI instead of the BMW?
Pretty much depends on what you want out of the car? If Im honest the M135i is in a "different league" when it comes to outright performance & driver involvement, compared to the GTi. Having said that the 135i does lack 'soul' when compared to the proper 'M' Cars, so you may feel a little disappointed if you're hoping for the real deal. The GTi on the other hand isn't a "slow burner" by any accounts, but it doesn't quite set your pulse racing like the M-lite.... its very "effective" at what it does, but just lacks the excitement.
So why did I choose the Golf over the BMW? Yes... the Beemer is on the ugly side (but its definitely a 'grower'), but the main reason was that I couldn't negotiate the deal I wanted. Although I had been a BMW customer at this particular dealership for over 10 years, not only did they undervalue my part-ex considerably, but they weren't prepared to offer any sort of discount whatsoever. So I said sod you! I'm off to VW instead. VW on the other hand gave me a deal I would have been silly to turn down.... plus the fact that at the end of the day I needed a car that: 1) Offered more room in the rear 2) Wouldn't crucify me at the pumps & 3) Be relatively cheap to service & maintain e.g. replacement tyres (The Michelin Pilot Supersports on the M-lite will be more expensive to replace than the Dunlop Sport Maxx's on the Golf for example). Having owned a M5 I know first hand how crippling BMW servicing costs can be. My Golf on the other hand hasn't cost me anything in comparison.
Q2 Should I go for manual or DSG
Really down to personal preference really. If you can afford it then go for it. My current GTI is a 'manual' box, but Ive spec'd it this time round as I've heard so many rave reviews about the DSG and I wanted to see for myself what all the fuss was about.
Q3 3 year residual values are important to me as I would be buying out right, anyone have any gut feelings on residual performance for the 2 vehicles.
Monkeyhanger has pretty much answered that question.
Q4 What is the general consensus on the 19 inch wheels, yay or nay.
Do you know what... I liked the look of them when they first released the concept images a few months back. But now that they've changed them slightly (i.e blackened inserts) they no longer look like the original "snowflake' design & I'm not so keen. Having said that Ive still gone for them as I fancy a change from my current !8" Monza's (which look too similar to the standard 18" Austins)
Q5 What discount do you think I should be aiming for.
Managed to bring the total cost down from £31k to bang on £29k.... plus the fact that they offered me an additional £2.5k for my part-exchange more than what BMW was prepared to offer.
Hope thats answered most of your questions. To be perfectly honest there isn't a right or wrong choice. Both are great cars in their own right. Ultimately its just down to what you want out of the car? Do you want the 'fastest' hatch on the market right now or do you want the Best all rounder on the market. Only you can decide? (But lets hope we'll be seeing you a lot more on here)