Largely it's just personal preference. I've never heard of this type of "pre-1997" rule applied to cars before by a dealer -- sounds to me like a rule that was arbitrarily invented by some service manager. That being said, I don't know what the breakpoint was when MB moved ALL of its cars from dino oil to synthetic as "factory fill". Perhaps someone else here on the board knows the answer to this. I do know that synthetics were first offered and used by MB in its high-performance (AMG) cars before being expanded to other "civilian" car lines.
My E500 with 65K on it, purchased in Marin County back in 2003, had up to that time used non-synthetic oil. I began using Mobil 1 at the very first oil change after that, and have used it ever since. My car now has 113,000 miles on it, and it does not leak a drop. Not a single drop, anywhere. I use a 5,000 mile change interval on my Mobil 1, and for all of my other Benzes, which use "dino" oil, I have a 2,000-2,500-mile change interval.
Absolutely no ill effects to changing over to synthetic oil. While I do believe there, in some cases, may be some limited truth to the statements you hear about synthetic oil causing "leaks" -- I also believe that for a car like the E500E that a synthetic oil is the best solution. I have not rushed to change over my 560SEC or 560SL to synthetic and have no plans to change them over. Again, personal preference.
My one caveat to all of this is that it's more important than ever to know the chemistry of the oil that goes into your car, particularly if you're using dino oil. For older cars like ours (and even older ones like my SEC) there are certain additives that the oil companies have dramatically reduced the levels of (ZDDP, for one) that can directly affect the abrasion and wear-resistance characteristics of the oils in favor of optimizing them for emissions and fuel effiiciency. I recently had to change the Chevron dino oil I was filling my cars with for the past 20 years, in favor of another Chevron dino oil that had better friction-resistance characteristics caused by the needs of the valvetrain of my M117-engined cars. So, be careful and do your homework.
Cheers,
Gerry