I've driven the C240 a couple times as a loaner - even though it's a little bland on the inside, I was still pretty impressed with the car. Not much in the way of handling or acceleration, but nice for long-distance bombing down interstates. Smooth (esp. that tranny, I agree), quiet, comfy, a zillion airbags, etc., etc. Audio could use some work, but I've never seen a Benz with a decent factory system.

I'd be interested to see how the 2004.5+ sport models compare, they get the updated interior plus the handling upgrades. Plus the new manual transmission, I bet that would be a fun drive..

p.s. I prefer the e46 3-series to the W203's inside and out, but for some reason I've never been impressed with BMW's interior durability. Especially the leather - it seems like they use really soft, thin leather that's great new, but looks terrible after 5 years.