I've raced in both, and both have their advantages and disadvantages I guess. LeMons as mentioned seems to be like a big party where there is some level of competitive racing going on with half the field, and the other half of the field are either in things that are terrifying to be near on track, or that are rolling roadblocks. It's kind of fun in that respect, the giant speed differentials out there, but can also get frustrating to some degree. If you're someone who loves doing themes, decorations, dressing up, and generally being goofy, you'll love LeMons.
If you are someone who just wants to race and not do all the "stuff on the side," Chump/champ is probably more for you. Still some crazy cars out there, still some good speed differentials that can make things interesting, but you're unlikely to get Speedycop driving a Huey helicopter on the track or a pop-up camper, lol.
We've mostly gone toward occasional Chump/champ races since I guess the guys on our team just aren't that goofy (neither are we ultra-serious "gotta win win win" types, but we do like competitive racing without having to buy cigars and booze for Judge Phil lol). And I'm saying that with all the love of a team (us) who had a giant painting of Judge Phil on the hood of our e30, so.....
Also depends on the tracks you want to run (they don't both run all the same tracks), and what the other guys on the team want to do, of course. In LeMons you can "win" by having a crazy car, even if it's terrible on the track. In Chump, you pretty much win by...driving faster for the entier time than everyone else, and that's all ;)
There's also AER in the budget-enduro scene. Don't know much about it, but I hear it's more like bracket racing of sorts, so that's another option that could even the field.
As to car, e30/e36 may not win, but will be competitive and are typically cheap/easy to work on, reliable, and RWD fun. i think our e30 has finished every race entered other than one where it met a wall backwards.....e36s are dirt cheap to find on CL these days and have good aftermarket support. not sure what the penalty points look like for it these days - I haven't done a race in 2 years since all my money gets blown on stage rally entry......