BMW has confirmed that they are planning to release the BMW 335d in November 2008 (as a 2009 model). The 335d features a twin-turbo, diesel engine rated at 265 hp and 425 lb-ft of torque with an automatic transmission. It can do 0-60 mph in 6.2 sec. All this while getting an EPA estimated 23 mpg city / 33 mpg highway. (Ed: these were pre-release numbers, the actual numbers are 23 mpg city / 36 mpg highway, and 0-60 mph in 6.0 seconds)
In comparison, the premium gasoline-powered 335i is rated at 300 hp and 300 lb-ft of torque, and with the automatic transmission does 0-60 mph in 5.6 seconds. However, it is rated by the EPA at only 17 mpg city / 26 mpg highway.
So let's do the math. On the highway (where most of the big mileage is racked up for me, and in the U.S. overall), based on the EPA rating, the 335d gets about 27% better mileage. Right now, diesel fuel is about 15% more expensive than premium gasoline. So it makes financial sense, per-mile. The penalty performance-wise? The diesel is 0.6 seconds (roughly 11%) slower to 60 mph.
Many of the other traditional disadvantages of diesel have been overcome with new technology. AdBlue-injection and the availability of low-sulfur diesel fuel have reduced emissions to meet even strict California standards. Noise and vibration issues have been reduced to the level of typical gasoline engines. With modern engine designs and better glow plugs, cold-weather starts are not a concern unless the winter temperature is regularly below zero degrees Fahrenheit. BMW has a lot of experience manufacturing diesels in Europe, so the 335d should be fairly reliable.
Of course, diesel is only available at one out of four gas stations nationwide. The fuel is "messier" in that it doesn't evaporate if spilled and has a distinct smell. The diesel engines themselves are heavier and more expensive, too.
Taking all this into account, the 335d is hardly a slam dunk, but is worth considering. I know it will be on my car shopping list next year.