I purchased a 1995 E320 Wagon, which I'm really happy with, but the previous owner put newer 16 inch MB wheels on it with 225/50/16 Yokohama tires.

I've experienced a very rough ride, pretty much since the day I bought it.

Today I ignored the factory suggested air pressure and bumped both front and back tires up a few lbs with some good results: a more solid feel over railroad tracks and other bumps.

However, I can't help but feel that if I go back to the OEM size wheel and tire I'll have a better ride.

I'll be needing winter tires pretty soon, anyway.

Suggestions?

What kind of Yoko's do you have?

Let me see if what I think you said: "increasing air pressure made it feel less rough" (or more solid)?
I believe adding air should make allow transfer of more bump pressure from the road to the chassis, in other words the opposite of what you claim. At least that has been my experience.
I find that adding a pound or two of air makes a noticeable improvement in handling, its subjective of course but I can feel the steering response improve on the '87 300D with kust a lb or less of air!
On the 123 chassis its not easy to feel any difference at all in a pound of air because the steering is so, well - unrefined compared to the 124.
I assure you going back to 15 in wheel and tires will smooth the road bumps, there's more space between the road and the wheel.
I really like the improvement in handling I got when I went to 205-55-16 Yokohama dB S2 tires over 15 in. Yoko H4s or Nittos NT460's.
I would never think of going back to 15 in wheels unless I moved to where there are lots more pot holes in the roads (there are enough here that it keeps me alert trying to dodge them!)
Maybe you need to keep a set of 15 in wheels and tires for winter use?

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'95 E320 Wagon my favorite road car. '99 E300D wolf in sheeps body, '87 300D Sportline suspension, '79 300TD w/ 617.952 engine at 367,750 and counting!

Mine went on my 1994 wagon and the ride was quite rough - not as rough as on the 1991 4-matic wagon when its cells went, but noticeably rough nonetheless.

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Chip Johnson