I owned a 2005 GS 300SE for 6 years before going for the E350 CDI BlueEfficiency Sport which is now coming to 4 years of ownership.
Lexus
Plus:
Refinement, toys and reliability
Quiet as a mouse engine
Quick acceleration
Minus:
Changed both wing mirrors after 4 years (Expensive)
Changed one of the headlamp unit due to condensation
Had to change the xenon bulb after 3 and half years
Heavy on fuel
Poor build quality.
Merc
Plus
Rock solid build quality
4 years of ownership and touch wood nothing broken
Lights are much brighter and better at night to use considering I live in the sticks
Better residual value
Minus:
No reverse Camera
Parking sensors are very slow to react
Suspension is stiff (maybe sport version)
Sat Nav is fiddly and can be distructive
Overall, I prefer the Merc but it really depends on what you want. I haven't tried the latest GS but I guess they will be nice to drive