If ever a car deserved a decent engine it's the Audi TT. It's never made sense for this most well-groomed of coupes to suffer the ignominy of the effective but humdrum four-cylinder 1.8T motor for the first four-and-a-half years of its life - a fact made all the more obvious when you drive the new 3.2-litre V6 TT.

Alright, so it's true that a great engine alone doesn't make a great car (more of which later), but whereas the highpoint of the TT experience thus far has been looking at it, the emotional trace now gets another upward spike when you twist the ignition key, flex your right foot and hear the gritty rasp of its barely silenced V6. Few six-cylinder engines run it close for sonic clout, effortlessly eclipsing the Alfa GTA's but still falling short of the M3's brittle, fizzing aggression. What's more, it sounds equally good inside or out.

The compact, narrow-angle V6 has been a long time coming, but the contrast between 250 multi-cylinder, normally-aspirated horses and the 1.8T's 225 force-fed nags has made the wait worthwhile. It comes as a major surprise therefore to find that this fine new engine isn't the highpoint of the new flagship TT. That honour is reserved for Audi's revolutionary new Direct Shift Gearbox (DSG), which is so impressive it overshadows every other aspect of the car.

The technical intricacies of this transmission are too complex to go into here. Besides which, my brain would start hurting, so it's probably best if you imagine the following scenario. You're on a clear road, accelerating hard in second gear and preparing to upshift into third. (You can use the stick-shift or the paddles; there is no clutch pedal.) In a conventional manual or Selespeed-type semi-auto, shifting into third would require second to be disengaged and therefore drive to be interrupted as the clutch is depressed. Third gear would then be slotted and drive re-engaged as the clutch is released.

In a manual, the speed and smoothness of this procedure is entirely down to driver skill, but even in the hands of the silkiest, swiftest driver there's a perceptible pause in forward motion and more often than not, a mild jolt as the next gear hits home. Even the automated Selespeed system suffers the same compromise.

The DSG system sidesteps this perennial problem by employing a pair of electro-hydraulically controlled multi-plate clutches - one clutch for first, third, fifth and reverse gears, the other for second, fourth and sixth gears. Using our driving scenario as an example, this means third gear is pre-selected while second gear is still engaged. Only when we command the upshift does the active gear's clutch open, which in turn closes the pre-selected gear's clutch and feeds drive to third gear. There's no interruption in drive, no need to back-off the throttle, so the gearbox always remains loaded, which in turn smooths the gearchange. The same is true of downshifts too, the DSG's sensors assimilating road and engine speed data to decide whether to pre-select a higher or lower gear.

With a pre-selected gear in waiting, the DSG can complete a shift in two-tenths of a second - mighty impressive. But the really spooky thing about DSG is the utterly seamless quality of the shifts. There is no, and I mean no judder, stutter or pause in forward motion, just a precise drop in engine note as the taller gear is engaged. Likewise the downshifts are sickeningly smooth, a perfectly executed throttle blip raising the revs to precisely match road speed. Deliberately working your way down the 'box from sixth to fifth to fourth to third at 70mph or so doesn't faze it, while subjecting it to a sadistic sixth-to-second shift (the most complex operation it can perform as both sixth and second share the same clutch, thus preventing pre-selection) is dispatched glassily and without protest, although the shift time increases to nine-tenths of a second.

It's an amazing piece of engineering, particularly when you're in the thick of it, steering and shifting at the same time. In more mundane circumstances, such as executing a three-point turn or pulling out of an uphill junction it also delivers a flawless performance, with just enough drive engaged to induce some useful auto-style creep. What this does to clutch longevity I don't know, but there wasn't a hint of the pungent aroma you'd normally encounter in similar circumstances with some other semi-auto systems I could mention. And yet, having bleated endlessly about how paddle-shift 'boxes need to be smoother and faster, now that Audi has delivered the goods it seems to add to the sense detachment. Yes it's flawless, but there's nothing to it. The DSG deprives you of the enjoyment derived from the physical act of driving and the challenge of honing your technique and developing an empathy with the machinery. I have no doubt DSG is the future of everyday motoring. That's fine, so long as when it comes to cars designed and built primarily for enjoyment we are still given the choice of DSG or a good old-fashioned stick shift.

While the TT's new drivetrain sparkles with innovation, the uprated chassis remains deadly dull. The steering is heavy and what little feedback you get is laced with kickback. There's masses of grip, as you'd expect from a smallish car shod with 18in wheels, but it's not malleable, just flat-footed and uninspiring. There's little or no mid-corner adjustability. Sure you can safely, securely beat the thing senseless up and down some of the finest mountain roads known to mankind, but your emotions remain unmoved.

None of this is likely to stand in the way of showroom success, for the UK is the TT's biggest market. Beefed-up looks, more power, a quality engine and driver-flattering transmission will reinforce its appeal. And with a predicted price of just under ΂£30K, it's a thoroughly tempting package. Whether the TT's slick image is enough to fend off the looming threat of the cheaper Mazda RX-8 and Nissan 350Z remains to be seen.