Sat in both at the NYC auto show (between brawls) and was amazed to find that the A4 felt tight and cramped while the A3 did not. Anyone else? I think the volume numbers are roughly the same. Somehow the A3 seems roomier. When it comes to the exterior, the A3 wins there too. A4/S4 B7 is just a mess -- with the exception of the RS4 which looks right to me. A3 is nice...

Definitely more rear leg room in teh A3 than my old Avant. And there is no right knee problem with the center console like there was with teh B6.

And I love the looks of both new models. I think the A6 is a huge improvement too (never liked the previous model's exterior that much).

Having an A4/B6, I would say the interior sitting volume is about the same. I specifically sat last Sunday in an A3 to check how the back seat space compares to my A4, and it's exactly the same! I put my driving seat in the same position I have it in my A4 and looked at the remaining gap between the back of my seat and the front of the seat behind. Same, which is like 3-4" in my case!
However, the width of the cabin seems to be narrower than in my A4 B6.
Somebody posted last week the real dimensions for the A3, look down the page.

I sat in the back of an A3 with no sunroof, and it is much roomier than my B6 S4. With the sunroof the headroom was reduced.

you don't mention your height and driver seat position including the inclination of your driver seat back support.
For the front passenger side, unless you usually carry people over 6ft. I would say there's adequate room in the back for most people if you don't push the seat all the way back.