Well I just turned 17, and my first car is an 81 280E that I bought as a project/fixer-upper, and needed a lot of work because it was very, very badly maintained by the previous owner (sure was cheap though
). A few things about the 123's and teenagers - they're very loud, not too fast, except the 300d turbo which is the loudest of the bunch. They're also very, very bad to put simple stereo's in; without a lot of work a cd player and some cheap new speakers won't sound half as good as they would in most newer cars (even 124's). A few of their common problems can also be quite a problem for teenagers - most of the 123's ive seen have quite a bit of play in their steering wheels, and though I don't know your daughter, most teenagers do tend to drive with one hand/no hands sometimes to show off, and if you don't have both hands firmly holding the wheel, the car does have a tendency to move to one side (usually the right) quite fast, which could easily cause problems.
I learned how to drive in my car and a suburban, and I remember the first time I drove a honda accord how insanely easy to drive it was - the steering was firm and tight, and the gas pedal wasn't mushy at all. In my mercedes, i need to slow down a lot more when making turns, probably because it's so high off the ground and the suspension is so old, and the gas pedal feels really loose.
Also, make sure that if you get one the a/c works; a lot of them have a/c problems which can be a pain in the summer. The 123 does look a little too classic for a lot of teenagers, but it sure does get a lot of attention. I think a 190e would be a great idea; its quiet, pretty small, easy to drive, and looks pretty modern.