There are actually more versions.
316i, 318i (M10), 320i, 323i, 325i (M20), 318iS (M42), 320iS (destroked S14). The South African 325 (actually 2.7l) and a 333i.
If you want the best one for horsepower mods, take the 325e and slap the High compression head from the 323 on it. This was what Alpina did in SA for the 325i (2.7l).
If you want a car that handles from standard, look at the 318iS. It is gutless initially, but if you spend enough money, you can get 300hp from the S42 motor (sport version of M42). The 318iS, 320iS (Italian) and 325iS all have the same body and suspension.
Personally, the 318iS is the rarest of them, but the 325iS is the one that is most fun to drive outside of the really windy stuff.