In my last article about Core i3 vs Core i5 processors, I spent my verdict talking about how muddled the waters were when trying to compare i3 and i5 processors. This, thankfully, is no longer the case. The differences between the processors are clear. The i5 is quad core, the i3 isn't. The i5 has Turbo Boost, the i3 doesn't. The i3 has hyper-threading, while i5 doesn't.
Overall, the additional cores and the Turbo Boost feature on the i5 makes it a clearly quicker processor in virtually all usage scenarios. The catch, of course, is price - the least expensive i5 is about $50 more than the most expensive i3. I think that spending the extra money is worthwhile if you're a computer hardware enthusiast, but the average user with a tight budget will likely be fine with what the i3 has to offer.
Both the Core i3 and i5 are great processors, so the question really comes down to how much you have to spend. Fortunately, both processor lines use the same socket and are compatible with either of the new chipsets, so you can mix-and-match those to find a pricing and performance sweet spot.