First time I heard of this!
The 325ci and 330ci are getting a face lift, that has been confirmed and post on this board also.
http://www.bmwnation.com/news/2002/021216_b.html
BMW is coming out with a 330i Performance Package sedan.
http://www.bmwnation.com/news/2002/021213_a.html
But I really doubt that BMW is going to re-engineer the M3 to get a full inch of extra width. That is not an easy task (if it's more than just cosmetic).
Besides the all new 3 series comes out in 2005 as a 2006 model. Doubt BMW would change the M3 so dramatically for only 2 year run. At best they are going to put wider rubber on the car and flare the fenders further out, but this doesn't sound like something BMW would do.
Anythings possible I guess.