I owned a 1989 260E for a couple years and was happy with the experience. Though the engine (M103, 2.6L) had about 20 horses less than the 300E (M103, 3.0L) of similar vintage, I never found the car underpowered. In fact it pulled strongly, especially at highway speed. The engine also had a nice growling sound to it.

I think a well maintained specimen, at the right price, is definitely worth considering rather than just written off solely because it is a 260E.

The following thread may also give you more input:

260E v 300E