My Corolla was totaled while parked on the street (who could have foreseen that?!), so in replacing it I was thinking safety, which the V40 has in droves (save for stability control, which was reserved for $40K cars in 2001). The V40 has turned out to be an ideal compromise between all the things I want in a car. While it doesn't excel in any one category (except for safety and comfort, Volvo's trademarks), the V40 does everything pretty darn well! You don't have to trade efficiency for performance, you get both at above average levels. Same for size vs. cargo space, handling vs. ride; all the places where you expect to give up one thing to get another. Handles everything you throw at it.
Essential Volvo-ness in a smaller, less expensive package. Love: class-leading (at the time) 5-speed automatic, tight turning circle, great stereo, flat cargo floor (with back seat folded down), strong acceleration at any speed and with minimal turbo lag, comfy seats, automatic climate control.
The usuals: lame cup holder, paint degraded by bird poop, etc. While highway mileage is stellar, around town could be better, considering this is only a 1.9L car. Expensive to maintain, but you get what you pay for. If you want a cheap car, that's what you'll get. A used V40 would make a great buy.