Bilsteins and Konis are both very high quality shocks with lifetime warranties. The FSDs will give you a better ride than the Bilsteins, the Bilsteins are arguably a little more "sporty" feeling as they have higher initial compression damping and are less digressive.
Both of those dampers will tolerate a moderate drop. I have the FSDs on my street-car 330 ZHP and it rides and handles better than it did with the factory dampers.
I have very expensive coilovers on my race car, and while it's true you can get a budget set of coilovers for your street car, there is no advantage to doing so, while there are a few disadvantages. They are cheap for a reason.
'02 330Ci - Megasquirt 3 tuned by PFTuning.com, M50 manifold, Kromer Kraft headers, Motons, widebody, etc.