Date registered: Feb 2008
Vehicle: 2004 W220 (S430) ; 2001 R129 (SL500) Sport
Location: Alabama Gulf Coast--formerly Charlottesville, VA
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Transmission is your most likely culprit.
However, you said you have never driven another 250, so you don't have much to compare. If you are comparing it to the acceleration of a modern car, even a modestly powered one, it may be that the acceleration you are experiencing is normal. The 250 is not a powerful car; in fact, to say acceleration is "adequate" is probably being charitable. It is the classic case of a lot of car and not much engine.
That said, it should pull hills okay and not lose speed in lower gears.
If the transmission is okay, a compression check is the next thing I would try. If your engine is losing compression because or worn rings, it will also be losing power.
How many miles on the motor?
"Don't pick a fight with an old man. If he is too old to fight, he'll just kill you."--John Steinbeck