More important, matched with Mercedes' high-tech seven-speed automatic transmission, the new engine makes the E350 generally more responsive than the 2005 E320. The 3.5-liter V6 has fully variable valve timing, delivering an impressive amount of torque from idle all the way to the redline. The E350 responds much more immediately, with more obvious acceleration, than the old E320, no matter how fast it's already traveling when the driver dips the gas pedal. The new engine is also noticeably smoother, particularly at high rpm. And thanks to the seven-speed transmission, the improved performance comes without a corresponding decrease in fuel mileage.

The diesel-powered E320 CDI is impressive. Its turbocharged inline six-cylinder diesel features all the latest high-tech goodies, including CDI, the common-rail direct injection system, which delivers fuel to the engine at an incredible 23,000 psi, compared to 100-250 psi in a typical gasoline engine. Yet the technology matters far less than the results. Forget everything you know about diesel-powered cars built in the 1970s, '80s or '90s. Slow starting? Not anymore. Like all diesels, the E-Class version still needs electric glow-plugs to heat the combustion chambers before starting. Yet during our week-long evaluation, in early spring in the Midwest when mornings are more than cold enough to leave a coating of dew on the landscape, the E320 CDI never started more slowly than a gasoline engine.

Unpleasant odors? You'll still get that oily diesel smell when you fill the E320 CDI's tank, but once the filler cap is back on and the car is running, you'll notice no unpleasant fumes inside or out of this E-Class. Excessive engine noise? At idle, during warm-up, you'll hear the rapid tick-tick of diesel noise more loudly than anything coming from the gasoline-powered E350's engine. But once the diesel is warm, there's very little difference in the amount of engine noise reaching the cabin compared to other E-Class models. The diesel engine is also surprisingly smooth, and the extra bit of noise comes with some excellent benefits.

Start with outstanding fuel economy. According to the EPA, the E320 CDI beats its gasoline-powered counterpart by more than 10 miles per gallon for both city and highway driving, estimated at 27 and 37 mpg respectively. Our test suggests that a 10 mpg edge overall is easily achievable in the real word. With predominantly highway travel, the CDI has a range of 600-700 miles per tank, so owners won't have to tolerate the smell of diesel fuel very often. With gasoline topping $2 a gallon, and the mileage advantage of the E320 CDI, the paradigm for the typical American buyer may finally have shifted toward diesel engines.

Why? Because the E320 CDI performs just as well as the gasoline powered E350. Its 201 horsepower is impressive by diesel standards, but that's not the half. This engine produces a whopping 369 pound-feet of torque, more even than the E500 gasoline V8, and it's the twisting power of torque that generates acceleration. Dip the accelerator pedal on the E320 CDI and it jumps, quickly enough to spin the back tires just by jabbing the gas if you switch the traction control off. Before the introduction of the new 3.5-liter gasoline V6, the CDI would leave the standard gasoline-powered E-Class in the dust. Even now, it will run neck and neck with the E350, up to about 90 mph. Moreover, the CDI engine breathes freely enough that it keeps pulling strong up to the transmission's shift points.

Yet there's nothing like the V8-powered E500 for drivers who put a premium on smooth, exhilarating acceleration. This V8 is sweet from idle to the 6000-rpm redline. And the E500 flies. At a stoplight or from 70 mph, there's a deep well of torque underfoot and plenty of acceleration. From the seat of the pants, the E500 feels like the quickest car going among midsize luxury sedans, save the special high-performance models.

The seven-speed automatic transmission improves acceleration, performance and response, but it also enhances fuel efficiency when compared to a more common five-speed automatic. Gear changes are barely noticeable, especially in the higher gears. This transmission allows significantly quicker acceleration for highway passing situations. And it doesn't have to go through every gear: Step on the gas and the transmission will skip down to the appropriate gear, switching from seventh to fifth, for example, and from there directly to third, meaning two downshifts instead of four.

Smooth, serene and quiet: That's the dominant impression at the wheel of any E-Class, unless you have the accelerator floored. There's very little vibration anywhere in the cabin, and almost no wind noise.

E-Class cars corner responsively and provide a smooth, if slightly firm, ride. It's the balance we prefer in luxury sedans. The four-link front suspension is similar to that under the expensive S-Class models, and the five-link rear suspension does a superb job of controlling unwanted wheel movement, which is crucial to handling and ride quality. Bigger, wider wheels and higher-grip performance tires are available that are better for spirited driving on dry pavement than the standard all-season tires.

The Airmatic Dual Control suspension that comes standard on the E500 and is optional on the E350 replaces conventional steel coil springs with air springs. This computer-managed system adjusts the air pressure to the spring at each wheel, based on road conditions or driving style, to slightly soften or firm the ride and to add or decrease body roll (lean) in corners. In combination with electronically adjusted shock absorbers, the air suspension can automatically improve ride quality or handling or optimize the balance of the two, depending on where the car is traveling and whether the driver is cruising or driving quickly. The system works automatically, without switching suspension settings between sport and comfort.

The variable-power steering system provides more boost for easy turning at low speeds, and less for more progressive steering response and feedback at higher speeds. We found the light steering makes maneuvering through crowded parking lots easier and more pleasant. The current E350 feels more agile and responds more precisely than the previous-generation E-Class.

We found the brakes on the E350 to be excellent in terms of performance. This car stops straight, true, and short, with no drama whatsoever, and will do so repeatedly with virtually no brake fade. But we didn't care for them. All of the E-Class cars come with Sensotronic Brake Control, commonly called brake-by-wire. The connection between the brake pedal and reservoir of brake fluid is electronic, not mechanical. The advantage? The electronic system can apply brake force to each wheel independently, helping to keep the car traveling straight and true during panic stops, even on bumpy, uneven roads. It will also keep the brakes on full in an emergency situation, as measured by sensors, even if a driver inadvertently eases off the brake pedal. And if it's raining, the system periodically, lightly, applies the brakes to sweep them dry. Still, the brake-by-wire has its quirks. Several testers found them difficult to modulate in everyday driving, making smooth braking around town a challenge. In short, we don't really like them. The E-Class models have progressively larger brake rotors, depending on the engine's power and corresponding speed potential.

The E-Class wagons give up almost nothing to the sedans in performance, fuel economy or handling dynamics. They simply add an element of versatility the sedans can't match, and they are quite handsome to boot.

The 2006 E55 AMG operates on another plane entirely, with 469 horsepower and gobs of torque available from idle to 5000 rpm, peaking at more than 500 pound-feet. The power comes courtesy of an intercooled Lysholm screw-type supercharger and advanced engine control electronics. No matter where or when you stab the throttle, the E55 rockets ahead. Mercedes says it will go from 0 to 60 mph in 4.5 seconds, reaching an electronically controlled top speed of 155 mph in half a minute. And now you can get this kind of performance in a station wagon. This year Mercedes offers the E55 as a wagon for the first time. Does it still qualify as a soccer mom's car if it can go toe-to-toe with a Porsche 911?

The five-speed automatic in the E55 AMG shifts quickly up or down in most situations. It doesn't hunt back and forth for the right gear, even in hilly terrain, and it rarely shifts unless the driver changes the angle of the gas pedal, which is good. When the driver prefers, an auto-manual shift mechanism allows a high level of control over gear selection. Toggling the shifter left or right, the transmission shifts quickly up and down at the driver's discretion. The system will hold the selected gear indefinitely just below the 6000-rpm redline, but it won't let you bump the engine off its rev-limiter without shifting up a gear. Should the mood strike, a driver can run through the gears or challenge a curving stretch of road almost as if it was a fully manual transmission. Most of the time, however, we simply put it in Drive. Even the high-performance E55 AMG is so quiet that the driver forgets just how powerful and fast it is until the throttle is opened up.