I'd only consider the new model. Every time you looked at your old S40 in the drive you'd know that for a few grand extra you'd have a COMPLETELY different car, lightyears ahead of the old one. The buff's tell you that its built on the Focus chassis, yet it competes with the 9-3, 3 series, a4 and so on, but it doesn't really, it fits nicely between the 2. You can pick up a new model '05 for about 24-26k, not bad for a 32k car.
Neighbour has a V50 (new s40 estate) in the 2L diesel engine, and what a car!
Also, the interior, with its floating console is a revelation in my opinion, and only a matter of time before the other stable-mate manufacturers copy/paste it.
As if that wasn't enough, the list of STANDARD extras on the new S40 is excellent (pretty much everything you'd need).