In my personal experience I can say that the XJR is not any better than the Mercedes. It may be worse in reliability. Jaguar has had good marks from JD Powers, but I don't know how they pulled that one off. The Jag also does not have rear seat side airbags like your C-Class. The Jag only has side curtain and front side airbags.
Common issues are moonroof, soft trim, and unexplained electrical faults. The Jag does have a very good aluminum chassis, excellent handling balance, and decent power. The 2006 XJRs did not have Brembos. The Brembos were dropped for cheaper single piston sliders. Jaguar claim that the single piston sliders have better pedal feel and better fade resistance. Have driven both I am not so sure. The NAV system in the Jag is excellent. It is a Denso unit like in the Lexus. Although like the Lexus it is a touch screen. Therefore the screen will wear and crack with use. That is why Mercedes-Benz, BMW, VW, and Porsche avoid touchscreens like the plague.
Overall the Jag is larger, depreciates the same or more, is produced in smaller numbers, is less safe, and basically on par or worse with MB quality wise. I recommend a Jap car for the person that values reliability above all. How about a nice Hybrid GS? OH, wait, going over to the Lexus forum it looks like the newer Toyotas and Lexuses aren't that great either. I am sure they are still a little better than Euro cars for reliability, though.
Best of luck, the Jag will be a good car for you.