I just got a 2002 S40 for my wife in November. My short answer....We love it!!

Pros:
It's a sweet car. Good acceleration especially for highway passing. Handling is precise. Ride is terrific for a smaller car. It's really too easy to drive this car faster than you oughta (you feel safe at 90+MPH). Comfy interior, great sound system.....again wife and I are very pleased. She drives it most days but I've been taking it on her days off.

Cons:
Maintenance wise, it has been well noted on this web site that the rear brake pads wear out in an average of 20,000mi. So it may need new pads more often, but the stopping power of this car is remarkable. I had to use it a few weeks ago when some yahoo cut me off obviously looking to get an a** full of radiator. This point doesn't bug me as I will just replace the pads myself for cheap ($40 part cost, don't know how much a dealer is off hand).

My complaints (and I'm really reaching here):
Cup holder location is just below your right elbow between the two front seats. I could see if you were careless, it could be easy to knock your drink over. The holders themselvs are good and stable but easy to bump. I just don't carry drinks in the car often so no biggie...
Also view toward the rear is somewhat obstructed. But what can you expect in a compact sized car with a generous sized trunk? Just takes a little getting used to.

So my vote is go for it. Wonderfull car!!!

MORMIT
1985 245DL 230,000mi "Inga"
2002 S40 2,500mi "Sigfreid"