I actually just got a 2006 GT (still has temp tag) myself and as you can see by my sig I had a Sonic Blue 03 Cobra.
The cobra was never a daily, just a car that sat in the garage and came out on nice days. I loved the car, it had the basic cobra mods and made 458rwhp. Absolute BLAST to drive and the blower whine!!!!!!
My car had the famous "clunk" like they basically all do, that bugged the crap out of me as it sounds like the rear end was going to fall out with every gear change. Not to mention the wheel hop. Like everything there is aftermarket parts available to help with this. Lets face it.. the suspension is from 1979 and while it does have IRS it is a ford, don't expect a whole lot back there.
I'm not saying the live axle in the S197 is "modern" by any means, it is what it is.. its a mustang. The front suspension however is a HUGE improvement and is very noticeable when driving. My GT is a daily driver and as far as driver comfort is way ahead of the cobra. Like everybody else says, the interior fit/finish is much improved and as my car is stock the interior is very quite. Even the little things like auto up and down on both windows is kinda cool. Hyd clutch is also very nice for a daily, that cobra will give you a leg workout thats for sure.
Of course I miss the blower whine and the power, but I have also noticed that these little 3valves love some boost. So If I could get my 500hp back and have the S197 chassis then there is no reason in my eyes to even look back at the cobra. Also have to look at being it is a newer car the interest rate is much cheaper than going back to an 03.
So in a nutshell for me the S197 works because I need the following
-Newer/reliable daily driver
-Still fun to drive
-Great looking car and seems to have plenty of aftermarket to make it look however you want
-When I do get the mod bug there are plenty of things to do
I think so far everything has been covered it seems, i'll try to answer any questions you may have as I have owned them both.
My interest rate for a Cobra and the GT were the same. Also, my insurance was actually higher on my 2005 GT vs a 2003 Cobra, go figure!
If you really want a S197, you should get it. As stated above, much more modern then the previous Mustangs!