I have a 2005 S40, which I understand is virtually identical to the 2006 model. The thing that initially drew me to the car, and which I still like, is the simplicity of appearance of the displays and controls. They're very intuitive after getting used to them. The trunk is amazingly large for a car this size. The car has a "tight" suspension feel, a compromise between a "cushy" luxury car and the hard suspension of a sports car. The car is very responsive to the throttle and steering, and I always feel "in control" even in wet weather. Road noise is a little less than I expected in a car this size and the car "feels" bigger than it is. My only problems have been an intermittently squeaky seat belt and a radio that occasionally doesn't work when the car is turned on. I've read that the radio problem can be fixed with a free software upgrade from a Volvo dealer. This is a well-engineered, well-built car that looks really cool just standing still and is a blast to drive.
The Volvo S40 is great peforming small luxury vehicle. I highly recommend for the price.
Pros: The Volvo S40 is a solid rival to BMW 3 series, Mercedes C230s Audi A4s but at a much better price. If you want power under the hood, opt for the T5 (turbo charged engine). It'll give you power on acceleration and great gas mileage on the highway. Radio and climate controls are also very easy to understand. There are four big dials that control the main functions (volume, station, temperature, and fan speed). The radio has 10 preset options like most Mercedes, laid out 0-9. The S40 was the first Volvo to have the flat control panel with space behind it. It looked pretty weird at first but the storage space behind is great for small items you don't want flying around if you have to brake hard. The shift knob is short and easy to move. No zig zag pattern like Mazdas and Toyotas. Safety is wonderful too. You get alot more safety features for an entry level luxury vehicle than most. Whiplash protection, side and overhead airbags. There are even steel side impact bars built into the seats to distribute the force (SIPS) if you ever get T-boned at a stoplight. Cons: It is small. If you need alot of back seat room, go with another vehicle. The seats are designed for safety in mind and aren't as cushy as some others. My AC compressor cuts off sometimes on really hot days but that's on a vehicle with over 120k miles on it. Overall it's a great vehicle, and if you're looking for an affordable European styled luxury vehicle, you'll be very happy with it.