Hi, I bought my Honda City in May 09 and am very satisfied with the car (now ab. I had a Santro before this and was looking for an upgrade to Sedan from some time. Taking several test-drives I found Honda City and Maruti SX4 very close on many fronts.
Featurewise I found SX4 very rich but there were serious drawbacks like visibility on sides and rear was not good, it was too tall and bulky.
I chose Honda City because of great looks, driving comfort, and good milage. We were also skeptical about audio system that did not have CD player but now I realize that option of USB input is much better than CD system. I just bought a memory stick (4GB) and can choose and store hundreds of songs (it is like auto CD changer if you compare with old cars). The best thing about City is smooth (and small) stearing that gives you full control.
Adding some more details -Ok so let me give more details when comparing with the competition. I test drove Hyundai Verna - It was decent drive with problem in fuel economy and no looks. SX4 was really close because of cost and feature superiority. I also took test drive of Altis (which I agree is in next segment but very close price wise) - Altis was little better than City (Toyota and Honda are almost equally reputed). The problem with Altis is that low-end model comes closer in price to City but does not have even basic features and any good color available in low-end model.
Finally I think my decision to buy Honda City was based on personal recommendation of few friends who had it (ZX version) and my own personal preference of going with the brand Honda for superior quality automobiles. Resale value of Honda vehicles is also very good (if you care for that). On highway - it can easily race with 1.8 Lts capacity cars (with lower fuel consumption). BTW, I remember one more negative point, the height of vehicle has been reduced (not ground clearance but height of roof) which is little bit of discomfort for tall guys.