Quality expectations: I use Nikkor lenses, and for the most part only good/great ones. The lens is a major contributor to quality, along with handling technique. I expect to make a sharp, essentially grain free 12x16 inch print from T-grain ISO 100 films like Acros or TMax 100, and sharp prints with minor grain from TMax 400 or FP4+. With HP5+ and TriX the grain will be visible, but it is usually pleasing and not obtrusive. Grain aversion is highly personal, so one should test that for oneself before forming an opinion. Anything from 8x10 and lower, I simply don't worry about it. I must qualify something here: My expectations are based on prints. I cannot get the same quality, perceived or real, from a scan of the same negative. It is just as if the grain becomes more mushy, or the "edge" gets taken off an image during scanning. That is of course also due to my desktop scanning equipment, but that is the reality I have to live with.
While a direct comparison like tkamiya has pointed out is not always easy, I think most photographers in the print selling business sooner or later make that comparison and settle on one or the other. Of course, it is usually the larger formats that are being considered. My own view is to enjoy film media for their uniqueness and for the opportunity to do darkroom printing, which has its own character and possibilities. As an image-making process, analogue photography is different for not involving computers. That is something I personally like a great deal. So while one can compare the cold hard print from each alternative, at the end of the day, other factors like the process are also important to some of us, and quality is by far not the only one.
35 mm gives one a few possibilities that are difficult to achieve with larger formats. The longer focal lengths and relatively narrow perspectives available create obvious possibilities for nature and sport photography, amongst others. The high magnification ratio makes it possible to use grain to achieve certain effects. This can be enhanced by film choice and developing methods and chemistry. The Pickford's books "Miracle Rivers" and "Forever Africa" are a marvelous example of this. For sheer ease of use, and wide range of lenses and system accessories available, 35 mm systems are indispensable for many photographers. I adore my MF cameras, and use them at every opportunity I can. But I always have a 35 mm film body packed with a few lenses when going somewhere. Photographing kids and family, knowing an 8x10 print is as large as I want to go, the 35 mm is perfect. The cross-over compatibility with my digital system is also a major advantage.