To the best of my knowledge, the metal gasket is for the M44 timing case and paper is for the M42. This question came up on some 318ti forums, and it sounds like some of the holes in the gaskets also differ, and using the wrong one will starve the timing chain tensioner piston and sprayer.
I have an M44 timing case on my 2.1L M42, built by Metric Mechanic, and as far as I can tell it just has the metal gasket. I have not had the timing case off of this engine since it is practically new, but I did need to fix a leak in the oil filter housing and got a look at the timing case gasket where it sticks out at the edges and it is metal.
As an aside, I recommend switching to a later model M42 timing case because the deflector/idler sprocket in the E30 M42 is a time bomb. It WILL fail, either by blowing out its bearings, or by breaking off the boss on the timing case itself. Later M42's used a plastic guide rail there, which is vastly more reliable. You can also use an M44 timing case, which has the benefit of a larger oil pump (to move more oil), but you will need an adapter bracket to hold the crank position sensor since it is not part of the M44 timing case casting.