The point probably is: It's not a practical hatchback at a practical price. The main problem is, you're supposed to be paying that BMW premium for:
1: Luxury
2: Prestige
3: Sportiness
Luxury is such a marginal thing, especially when applied to a car so small. Nobody has any room, and if you're paying for a 'luxury' car, you definitely want to be able to extend your elbows even just a little bit. This doesn't bother Mini owners, but then, they have a better looking car with a moonroof, and the name Mini (should be Midi-(um... sic) actually) speaks for itself. EDIT: And guess what? the smallest luxury (priced) car on the planet, the 'smart', is now officially dead.
Prestige? It's the 316 all over again. But now it's easier to tell who's scrimped on the cash and gone for the bottom model (which certainly isn't going to impress the snobs) or who's gone and blown his bills on a small, impractical and expensive car (which won't impress your co-workers, either... or at least not all of them).
Sport? Refer to reference to WRX. There's a car that's huge inside (especially in wagon form), thus being practical and full of elbow room, which can kick ass two ways to Tuesday, and won't raise too many eyebrows. Or the Legacy. It looks better than both of them, and has even more elbow room.
If BMW had meant the 1 to be a driver's car, it should have made it a two-seater... then people would understand... and wouldn't b*tch so much about how impractical it is, because it wouldn't pretend to be.