2002 might be better. I would try to swing a 2004 if I were you. There were reliability improvements and the move to DVD-based navigation and the 7-speed transmission.
id still go for a later model, they really are nicer cars and MB spent a lot more time refining the later years. this coming from an owner of a 99/00 model
The mechanical bits are essentially identical so reliability will be the same.
However, given the absolutely tiny price difference, the nice aspects of the 500 are worth it (standard zenons, some nicer interior bits so I'm told, extra power, etc.)
As a owner of 2003 S430 4Matic, I do not see the difference when it comes to a daily commuting driver. If you want more room for performance and options, go for S500. If you want economical(gas price) and don't mind the 27BHP differences and if the price difference is significant, go for S430. Maintenance and reliability will be almost the same since these cars are equipped with notorious Airmatic suspension and 16 plugs when its time for tune up. Later year model will be the key no matter it is S430 or S500. I used to own 2001 E430 and the difference between E and S class is pretty significant.
I have not driven an S430 but I do own an S500 4 Matic. I would pick which ever car has the least amount of miles or is in the best condition. If you can get a carfax and or check service history that would be helpfull as well. If you take the vin into your local Mercedes service department and ask the service manager to run a check it will provide you with some great information as well.
There are all pretty much equally reliable or, more to the point, unreliable. If you want a reliable daily driver, you should not be looking at early W220s at all. As for the engine difference, I have the 5 liter but almost never use its full capabilities.
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