The importance of a good transmission can't be underestimated and the new S-Type comes with a great one, perhaps the best available. The six-speed automatic ZF is the same transmission used in the new BMW 7 Series (which starts at $67,850). This transmission is extremely responsive and silky smooth. It offers improved drivability around town, a benefit of the additional ratios. It delivers both better performance and improved fuel economy. It features a Sport mode, allowing the driver to shift manually. Select this mode and the transmission will not shift above the highest gear selected, though it will shift up and down below this gear according to conditions. The transmission has two overdrive ratios. Sport mode stays in fifth unless the driver maintains a steady state for 30 seconds. But most of the time we preferred to simply leave it in Drive and let it do its thing, as it does it so well. It's a smart transmission: lift off the throttle for a corner and it senses the steering angle and holds it in gear. It also holds a gear on hills, eliminating hunting between gears.

The 3.0-liter V6 engine is smooth and delivers plenty of power for most drivers. Jaguar revised the V6 with an improved variable induction system and continuously variable cam phasing. That means the engine can breathe better at different engine speeds for faster response around town. We have not driven an X-Type 3.0 since the V6 was revised nor have we tried it with the optional six-speed automatic, which should further improve responsiveness and performance. Acceleration performance and fuel economy are improved over the 2002 model. Also available for the 3.0 is a Getrag five-speed manual transmission. Like other S-Type models, the 3.0 comes standard with Dynamic Stability Control, traction control, and the new electronic parking brake. About 65 percent of S-Type buyers choose the 3.0 V6 model.

The 4.2-liter V8 engine delivers truly spirited performance. Jaguar has redesigned this engine, improving its low-rpm torque for quicker acceleration. Jaguar says this model will accelerate form 0 to 60 mph in 6.6 seconds, which is quite quick, though not quite as quick as the 2002 BMW 540i. Changes over last year's 4.0 engine include new cylinder heads, forged pistons, a new exhaust manifold, and many other changes to the breathing. Those changes increased horsepower from 281 to 300, while torque jumped from 287 to 310 foot-pounds, and those power increases come at lower rpm. As a result, the 4.2 feels relaxed and responsive around town and cruising on the highway, but delivers spirited performance when driving quickly on back roads. It feels more refined than before with more torque through the entire rev range. The 4.2 V8 generates 86 percent of its maximum torque at just 1500 rpm for greater flexibility around town. The new six-speed automatic dramatically improves the responsiveness of this 2003 model, making this a very strong car by any measure.

The 4.2 offers a firm ride. There is some road vibration on badly rippled roads, but it smoothes out on smoother roads. The 4.2 is quiet, with some wind noise at high speeds. It's stable at high speeds with precise, linear steering that makes the driver feel part of the car. Handling is firm without being too harsh. Jaguar's S-Type is not as stiff as the BMW 540i. It is the type of car that inspires confidence for those who enjoy driving without being a chore for those who do not. It felt wonderful when driving hard on narrow, winding roads in the hilly country on the Spanish Mediterranean. In short, it's a wonderful automobile, very pleasant. After driving the 4.2, we saw no need to spring for the R model.

This whole notion of "need" becomes a subject of debate after driving the S-Type R, however. As Jaguar Formula 1 racer Eddie Irvine said, the new S-Type R offers "fantastic acceleration" performance. It can accelerate from 0 to 60 mph in just 5.3 seconds with a top speed electronically limited to 155 mph. Big race-engineered Brembo brakes are terrific. Handling is superb, with the latest version of Jaguar's CATS as standard equipment. Yet the ride quality is quite comfortable. This balance between athletic handling and a smooth ride gives the S-Type R a dual personality. Most of the time, it's a relaxing, refined luxury sedan, but stand on it and it acts like a sports car, agile, quick, fun. It's not at all intimidating to drive as we discovered on some foggy mountain roads in Spain.

We could clearly hear the whine from supercharger when hard on the gas. Hot rodders may like that, but we wonder whether it would become tiresome. The S-Type R offers significantly more torque than the 4.2 model. It's very responsive at low speeds as well as when being driven hard. Power is very linear. The Brembo brakes are excellent. Steering is precise and linear. The R is very stable at high speeds. Handling is very predictable when working the tires. Pushed to the limit, it goes into a four-wheel drift.

The S-Type uses rear-wheel drive with a fully independent suspension. Though the S-Type shares its basic architecture with the Lincoln LS, there is less in common with the 2003 models, and the Lincoln and Jaguar are completely different in character, a tribute to the engineers for both cars.

Suspensions for the S-Type come in three grades: Comfort, the softest, is standard on the 3.0 and 4.2 models. Sport is firmer and comes on the 3.0 and 4.2 models with the Sport package. R is the stiffest suspension, using a unique CATS calibration and stiffer springs. Each of the three suspensions uses specially tuned dampers (shocks) and anti-roll bars and unique CATS calibrations. CATS, Jaguar's Computer Active Technology Suspension is optional on V6 and V8 models, standard on the R. CATS optimizes ride and handling by using uprated springs to increase roll stiffness and electronically controlled two-stage adaptive dampers (shocks). Accelerometers and a brake sensor send signals to an electronic control unit to dynamically tune the suspension to driving conditions. The result is an optimized balance between ride comfort and handling agility. It's completely automatic and requires no intervention from the driver. We found that CATS does a great job of filtering out road vibration and rough surfaces without isolating the driver from the road. With it, the car feels unflappable in the corners without riding like a race-prepared sports sedan on city streets.

Anti-lock brakes with Brake Assist come standard on all S-Type models. ABS allows the driver to brake and steer at the same time by preventing wheel lockup in an emergency stopping situation. Brake Assist senses a panic stop and maintains maximum braking force if the driver makes the mistake of relaxing pressure on the brake pedal.

Dynamic Stability Control or DSC is standard on all S-Type models. This anti-skid system works great and can help a driver stay on the road by preventing a skid. DSC links the brakes, steering, and traction control systems and analyzes information from on-board sensors to determine when the car is deviating from the driver's intended path. It then applies brake force to each individual wheel to readjust the car's course. This system helps the driver avoid losing control of the car, by reducing oversteer (sliding rear wheels) or understeer (sliding front wheels).