I also had a 97 E420, it was my daily driver for 7 years. I sold it with 240,000 miles on the odometer, still running great. I bought a 2003 E500 to replace it, and love it even more than the W210. I used to live in Madison too! I had a second set of winter wheels with Blizzaks for the E420, it was a great car for WI winters.
Yes, the 32-valve V8 from the 420 is an engineering masterpiece, although the 24-valve V8 in the W211 does have more power. The W210 E420 has 275 HP/295 TQ, whereas the W211 E500 has 302 HP/339 TQ. You can really feel the extra power, 0-60 takes 5.8 seconds, almost a second quicker than the E420 at 6.7. The power is much more immediate, and the car pulls very hard at any speed. The new 24-valve V8 is not as smooth as the 32V motor in the E420, you can hear more valvetrain noise as well.
Even though the W211 is a bit bigger, and is a more technically complex car, it is only about 50 pounds heavier than the W210 due to extensive use of aluminum; the front fenders, hood, and trunk lid are all aluminum.
The W211 handles noticeably better than the 210, the airmatic suspension system gives the car a super-smooth ride, but tightens up instantly if you pitch it into a corner hard. You can select three different suspension modes, comfort, sport I, and sport II. In comfort, the car glides along in pure silence. In sport II, the car is extremely firm and you can feel every expansion joint in the road, but cornering is impressive.
The interior in the 211 is more comfortable, and the instrument cluster and dash controls are laid out well. The interior looks and feels luxurious compared to the 210. Ambient lighting is really nice. The trunk is huge, with 15.9 cubic feet of space. There is a folding rear-seat option, to expand hauling capacity even more. Other neat options include distronic cruise control, glass panoramic roof, heated/ventilated seats, drive dynamic seats, park distance control.
Problem points in the W211 include the airmatic suspension; airmatic struts can fail, air lines can leak, causing the compressor to run excessively and burn out. Arnott Industries does make aftermarket struts and offers discount OEM compressors for less than half of what the dealer charges. Ball joints and motor mounts are also common wear items on the 211.
Overall, the 211 has more power, handles better, is more comfortable, and has more room. I still love the W210 though, my E420 gave me almost a quarter-million miles of trouble-free ownership.