I am very happy with my 2006 X3 3.0.
The X5 was too big for my needs, larger than the mini-van the X3 replaced; for one it would have taken up too much room in the garage.
The X3 is comparable in size to my Rav4, but gives me better leg room. I used to love my 2008 Rav4 Sport/V6, now I typically only drive the X3 (despite the lower power/weight ratio). Size is an issue for me (36" pant inseam length, 6'7" height).
If I still had kids in the house, I would go with the X5 (but if I still had kids in the house, I wouldn't afford the X5).
I live in northern Vermont, the X3 has never had any issue with snow. Unplowed roads with 6-inches of snow has not been an issue. (Using Michelin Ice-X on 17" rims)
ps Heated seats are great.
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