Wife just leased a 2006 S40 T5 AWD. I own a 2005 S4 so my opinions may be biased. I was impressed how comfortable the drive is, the smooth handling and 6-speed gearbox, nice acceleration for 218 hp in the lower revs despite the car's weight, broad torque band, simple yet sophisticated interior, decent navigational system, "thud" sound of the closing doors, overall sporty styling.
As explained above.
Rear-view limited, however, I understand the safety factor. For a 12 speaker, 305watt audio system, the sound quality is pretty weak. Installing an 8 inch sub will help. If Volvo put the S60 R engine in this car with a tighter suspension, you would have the hottest Scandinavian car on the market.