I agree with Richard, it's silly to compare two cars only based on their 0-60 figures. Otherwise, we would all be driving souped up Camaros.
I was hoping to offer Tate who started the thread some insights from both sides.
I definitely much prefer the interior and exterior of the M5 over the E55 and the 5 series seem to fair a little bit better in crash tests compared to the E class as well.
However, the rear leg room of the 5 series is just too tight for our purpose, according to the specs, the 3 series is actually offering more leg room in the back! Other issues to consider would be build quality which is quite subjective, some people simply don't notice all the minor annoyances that some of us do.
In terms of value, I think the M5 is great even when compared to a 996. However, for pure performance and handling on the track, the 996 or even a M3 would be a better choice, while the M5 would be a better candidate for long distance driving with a more comfortable and quieter ride.
Whether one prefers a stick or an auto box depends a lot on ones personal life style so it's hard to compare the two really. I have seen people switching from the E55 to the M5 and vice versa. Personally, we were comparing the E55 actually to an S class or a slightly used 750il as the luxury car in the family. We picked the E55 for its better resale value. If we were to get a stick shift car performance car, we would be thinking of either the M5 or the 996, possibly even the rare 996 TT if one can find one.
However, the M5 is surely a good compromise.
The best way to choose between the two obviously would be a test drive first, which I suppose is quite difficult especially for the E55 considering how rare it is. I think the M5's edge over the E55 in performance is mainly in the control the stick gives the driver and the superior upper end power, and better steering perhaps. I think they brake equally well with similar grip. I find the Road and Track article quite accurate in comparing the two cars. In that particular test, the E55 out braked the M5 but the M5 won at the end by like 0.1 point. I'm not too surprised as an autobox in the E55 is simply not suited for track driving which is how they evaluated the two cars. I have no experience with the understeer they mentioned about. One annoyance I have of the E55 is that it tends to follow the irregular surface of the road which I'm not sure if it's caused by the tires (the same Michelin Pilots in the M5) or the suspension.
I would personally love to see how an M5 will flare when pushed to the limit. Unfortunately, the only friend I know who has it is not a very aggressive driver and with the new car, I don't think it will be too nice if we were to borrow it and push it to the max while he cares for it like a baby. From my limited experience riding in the M5, the suspension is quite nice and I could not hear of the rattles a few complained about.