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Hey Silly_me:
I was shopping between these two cars just months ago, and decided on the Jetta. Here's my humble opinion: On paper, the S40 seems to have a slight edge over the Jetta. Slightly more power and torque (stock of course), a five-speed auto instead of the optional four-speed in the Jetta, not to mention it's a bigger car than the VW for just a couple of thousands more.
However after driving the two, I couldn't help but feel rather dissappointed with the Volvo. The doors and trunk close with a hollow insubstantial feel, and the interior materials and quality of assembly aren't quite as attractive as the VW's. On the road the steering is a bit mushy and uncommunicative, and everything just operates with a much more isolated impression than the Jetta (in a negative way). The tranny, despite having 5 gears, is reluctant to downshift under acceleration. The lack of a bigger wheel option is also dissappointing, as the S40 would be a really good looking car with some decent rims. On the positive side, the seats were superb; MUCH MUCH more comfortable and supportive than those in the Jetta. But seats alone weren't enough to sway me towards choosing it, and I settled on the Jetta instead.
Also I want to comment on the "status" thing about the two cars. VW has gained tremendous respect and envy during the last couple of years, and the Jetta is one of the most desirable cars in the 20-something age group. Volvo undeniably has a more upmarket stigma attached to it, but whenever I see an S40 on the road these days the driver almost always happens to be a middle-aged or elderly female.
Just my two cents,
Ian
 

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Jonboy34: I'm sorry if it caused you any inconvenience, but I've registered in VWvortex under the same nickname for two years and I thought it'd be easier for people to recognize me here...
By the way, my Jetta has been perfect for the past 3 months, and so has my sister-in-law's (she got the exact same car except it's silver).
 
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