Remember the X-Type? Man, that sucked.
Jaguar has had sort of hit-or-miss luck with small sport sedans in the past. But it is generally true that the cars which aren't Ford Contours in Jaguar costumes are better than the ones that are. That's why you should be happy about the XE, it's a small sport sedan that is entirely Jaguar. Originally revealed in Paris, the XE S is powered by the same supercharged 3.0-liter V6 as the F-Type, and right from the start that is a sign that the car was done right. It has an actual sports car engine.
The S is obviously the most performance-oriented version of the car, while a diesel version can achieve an astonishing 75 mpg (on the slightly more optimistic European test cycle, obviously) thanks in part to the car's lightweight aluminum construction. That makes it the most fuel efficient Jaguar ever. The S and its 4.9-second 0-60 mph time isn't going to outrun an M3, but it's entirely possible that some higher-performance versions of the car will enter production in the next couple of years. It would be interesting to see a real challenger emerge from Jaguar in this area.