is a high flow cat and cat back exhaust worth it?

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#1
I have a 89 325is and I am looking for some more horses. I gave it a tune up and put in a K&N panel filter. I have a jc chip on the way and am unsure about the exhaust system. How good is the stock exhaust? If all I plan on doing is the intake and chip will it make that big of a difference to spend $500+ on a cat and muffler? Also, I have heard that the 2 pipes coming from the exhaust manifold go down to just one 2" pipe before entering the cat and then go back to 2, 2" pipes before entering the muffler. The one 2" pipe sounds like the biggest point of restriction. Is this true?
 
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#3
First thing you should do is take a look under the car to see if and how much rust is apparent. That way, it can help you decide if you are unsure to replace the cat, if it could be a thing of importance.

everything stock is as bad as it can get, with holes in exhaust line, even worse.
free flow muffler, good; free flow cat and muffler, even better; all that with headers, awesome. just depends on how much you want to spend.

the exhaust layout you describe is the 'e' and 'es'. i think the e30 m3 goes to 2.5 inch pipe. the 'i' and 'is' looks like this:


the little block before the cat is the x-pipe where both pipes come together and creates back pressure. the placement of the x is specific to the engine to create the most gains. The y-pipe is where two pipes come to one and should be in the same place as the x which will be of the same purpose, sometimes better gains as long as the single pipe is the right size.
 


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