I pondered the IS350 (but went for a G35 instead, see comment). I tend to agree: IS300 is a high-end sport compact sedan, IS350 is an entry-level luxury car.

(Out of those two I'd go for the IS 300, but in general I'd go for the G35 again ;-)).

better is a really subjective term here, they aren't really the same car. (e.g. the IS300 is ugly and fast, the IS250 AWD is luxury and more useful than the rear wheel drive IS300)