I like my Pfaff 4.0 and would recommend it. It was in for service a few months after I bought it because it would not sew. The repairman told me not to use the thread cutter when I use YLI monofilament thread. I personally think a thread cutter should be able to handle all types of thread. I have not had any other problems with the machine.
I am sorry I don't know anything about the 3.5. I chose the 4.0 because I thought I would not outgrow it, and I still think that is true for me.