Having owned both the 300E and the 400E I can tell you they are different cars. I will present the debate in a pro/con 400E/300E format.
400E: The 400E has power big time. Especially the early 93 and 92 models. The downside to the 400E is that the first thing you do, after your first tank of gas, is go looking for more rubber. The car has about 300HP and 300lb-ft of torque on the same size wheel/tire combo as the 300E. 225/50/16 wheel tire package will fix the problem but it is an additional cost. The 400E also has about all the options standard. In addition to the big bump in power over the 300E (275hp vs 177HP, 295lb-ft vs 188lb-ft) you get the upgraded wood, audio, much improved brakes, and a shifter for the tranny that lets you select any gear. (vs the 4-3-2 setup of the 300E) The tranny is also beefier, but that goes with the total package of chassis fortification to handle the V8. Variable valve timing and a host of other techno-tricks give a much flatter torque curve than the 300E. (90% available @1500rpm with a peak of 4000rpm) With a 2.24 differential off the line acceleration could be better but fuel mileage is equal to the early 300E's. 0-60 is in the 6.5-7.0 second range where the 300E was about 8.0-8.5 seconds. Fuel mileage is about 18-20 mpg in town and 24-26 mpg on the highway. My 93 400E will hit 60 in 6.4 (consistently, on a cold night I have timed it at 6.2) and turns in about 20 mpg around town even if driven aggressively. On a highway trip it gets about 26 mpg if I'm driving 75-85mph. Mine is bone stock, I was just lucky in finding a excellent example. The steering is slightly "heavier" feeling on the 400E. The A/C and heater are also MUCH stronger in the V8. As far as known glitches in the 400E's...the cooling system is under allot of strain. It is adequate for even the worst conditions but if not propterly maintained it will cause 4-5 figure problems. If you can find a car that has been kept up perfectly then it isn't an issue. The V8 isn't stressed much by the W124 chassis so it lives a long time.
300E: This car has a light, nimble, tossable, handling feel that none of the V8's can match. You may not be going any faster than a V8 car but you are having at least as much fun. 300E's had some valvetrain problems that can be pricey to fix. Other than that the 300E is perhaps the best used car on the market. Please read and review the MercedesShop reviews on both the 300E and 400E (500E too if ya like!), they will give you more tech data and some other interesting info. 300E's are a bit cheaper to buy, maintanance cost between 300E/400E is about the same. You will be able to find a 300E in beautiful condition much easier than a 400E. This is because there were approx 10 times as many 300E's as there were 400E's. Also the 400E some people bought and used, rather than keeping it "meticulously maintained". People got themselves in trouble with the extra power as well. The 300E is probably the best "1st benz" or "starter kit" but drive them all before making any decision.
I would avoid the C280 simply because there are two better options available. Either the 300E or the 400E is simply "allot more car" for the money. The C280 had a "Sport" package that gave you lower profile rubber (but no wider!) and a few other appearance goodies. If you get a C280 I would recommend finding one with the Sport package.
Bottom line is just test drive, test drive, test drive. The more time you spend in these cars the more you will find which one suits your personality best. I just picked up a 92 500E. As I'm sure Mark Herzig could tell you, those things are too much fun. He has a 300E and a 500E at the same time. Perhaps you two should talk? If you need anything more feel free to post or email me.
Hope this helps...Lee
[This message has been edited by Lee Scheeler (edited 05-15-99).]