Try another key and see what happens. If you don't have an extra key, get one! Yeah, I know they cost two hundred bucks, but anyone who owns a 98' or later MB and doesn't have a spare "smart-key" is asking for trouble. Sooner or later the key will fail, and the car is dead in it's tracks. I see it happen all the time.

If you do have a spare key, and the locks still don't work, and the key still won't turn, you've probably got a faulty ignition switch. You're probably wondering how a bad ignition switch can cause the locking system to fail. Simple. The ignition switch validates the signal sent by the key when locking/unlocking the vehicle.