My point is, HP is one of the lowest selling points to these cars. Most buyers don't know, or care about how much HP an E-Class, or C-Class has. As long as it doesn't feel like it's wheezing, and straining to get up to speed. And I get your point about the "safety" of having enough power to get out of tight spots, but if you were talking about a 150 HP 3500 lb car, I might understand, while a 270 HP under 4,000 lb car is plenty "safe" in that regard, lol. Back just under a decade ago, a BMW V8 came with 282 HP, and that was considered fast.
The C-Class would do fine if it continued with the same motors, and of course, extra HP is always a good thing, so the new engines will only further help it.
C Sales have stagnated a bit, however, it's nothing shocking. Also, the W212 hit as a huge Sales success, and actually took over volume leader from the C, which I'm sure helped that.
The XF does have its own problems, but the fact that the 268 HP E-Class can cost the same as a 385 HP Jag, and slaughter it in Sales, speaks volumes about this demographic, and what people want in general.
In fact, the 300 HP of next years E will probably go unnoticed by the masses, however, it'll be the 30+ MPG which will get the tangible attention.
Again, I agree that M-B needs to stay competitive in the numbers game, and I sure would love more HP. But I don't need it, and with my style of driving, and the traffic I deal with, the E350 feel plenty fast to me, even after I drove it back to back with CLS550's, CLS55 AMG's, S550's, 535i's, etc. It's all about your driving style, location, and cravings.
Edit: For the record, I'd rather buy a G37 over a C-Class, personally, as C's aren't my thing (great cars, but also, not what I crave out of a Mercedes). The only thing a C really wins over the G37 in with me, is the trusted Benz safety (which is my #1 care when buying a car), and styling by a bit, although the G37 is a great looking car, and the Coupe is even nicer IMO.
About sound, I agree, sound is even MORE important to me than HP. However, if it ain't a V8, it doesn't sound that great to me. Although, Nissan's V6's always sound outstanding, but so does M-B's 3.5L, it's been even dubbed to have a "baby Ferrari howl" by Mag Tests. Being a V8 guy, I think it sounds nice, growly, and throaty enough for me at WOT.