SD
As I understand it (and I'm still researching this) one of the problems with the current Mode A and C transponders is that if two aircraft are close together and both are operating transponders, then it is possible for the replies from each aircraft to overlap and corrupt each other. (All transponders are interrogated and reply on the same frequencies - one interrogation transmit, one interrogation reply).
Mode S gets round this by interrogating all transponders then, on the next scan of the antenna, interrogating specific Mode S addresses so that only that aircraft will answer.
You might like to have a look at
http://www.dfs.de/dfs/internet/deuts...rkehr_engl.pdf . This (despite its title) is in english and is on the DFS (which is, I think, the German ATC authority) website.
P