That question's as old as the hills (well almost...).
Good luck finding a conclusive answer to that one. I read a hundred different opinions regarding this as I was asking myself the exact same question a few years ago. The opinion seems to be pretty much split, with no obvious facts exposing one as the clear winner.
I was able to demo the 602 s3's in my home, but not the 20's. I somewhat still rue this fact to this day. Anyways, I bought the 602's because they were the best speaker in that price range that I was able to hear, but it doesn't mean they're the best in that price range out of everything.
My advice is to listen to everything you can at home in your own system and make up your own mind, and forget listening to what everyone else has to disagree about...
If you search the forums you can likely find many opinions on these speakers. I agree you should listen for yourself. But I do think it is useful to read what people say because it may give you an idea of qualities to listen for and, if you have a sense of what you like in a speaker, you can maybe steer in the right direction.
Here's one past thread asking for the exact same comparison B&W 602 S3 vs. PARADIGM STUDIO 20 V3
and another that made comparisons B&W DM601S3 VS Paradigm Monitor 3
Try to focus on the descriptions and not the opinions. There tend to be polar opinions among some members.
I searched "dm602 paradigm" several good threads came up.
I remember back in the day my dealer let me take home the Studio 20's and 602's (both were earlier versions than what's there now) to see which I liked. For me there was no comparison, the 602 was flat, dull, and lifeless so those went right back. The Studio 20's were alive and 'breathed' music.
That's in MY room, with MY equipment and MY ears. The moral is....home test them both and see which you like.
jc I have had the opportunity to extensively listen to both of these using the same exact equipment in the same room over the course of several days. They both are excellent speakers but are worlds apart in how they sound. I have to say that I preferred the Studio 20's v.3 because IMHO the 20's imaged better and was much more articulate. The 602s3's were more laid back kinda lush sounding if you will and the low frequency extension was not as tight or controlled as with the 20's v.3's. In other words, the 20;s v.3's are a much better all around performer and present an accurate soundstage that is very impressive. Hope this helps. Good luck with your descision.
REMEMBER "THE ABSOLUTE BEST SPEAKER(S) IS THE ONE THAT SOUNDS BEST TO YOU." ONLY YOU KNOW WHAT YOU LIKE AND WHAT YOU PREFER. IT REALLY IS AS SIMPLE AS THAT. HAPPY HUNTING!!!!
The dane 42 and 52SE IMO are better than either of these but they are tougher to drive which may mean you would have to buy a more robust amplifier which adds to the expense. I like the AX Two from Audio Note the best under $1k but they make no surround sound speakers(such as a matching cetner channel) so if that's in the future plans they're not going to work for you.
There are so many speakers here -- you could try Von Sweikert, Tannoy, JM-Reynaud, Spendor, Linn etc all are said to make good speakers in this price range and all could very well sound a lot better to you than the B&W or Paradigm -- these two are big and have big advertising but that does not necessarily mean they're any better. So the best thing to do is go to all the high end dealers in your area and which carry these smaller brands and find out what they like and listen to 3-6 pairs in the same room with the same gear -- you may be surprised at how good some of these smaller companies truly are.
If you're interested in gathering a larger list of candidates I would post a question on Audoasylum something along the lines of "what would you like in the sub $1k price range for (enter music genres you like here) ...with what exactly you'll be using them for Home theater or JUST two channel or both. And note that right now you;re looking at the 20 and 602S3. http://www.audioasylum.com/audio/speakers/bbs.html
jc you will find the Paradigm Studio 20v.3 very hard to beat for the money. The truth is you should not have to pay the full $800 for a pair especially since the new v.4 versions will be out soon. My local dealer gave me a reall good deal on my v.3 version. There are better speakers out there but chances are you will have to pay more for it and this is why the Studio 20's v.3 are hard to beat. Hope this helps.