Elementary mode 'S' is due to become live in certain parts of Europe from March 2003 but not the UK who is going straight to enhanced mode S in 2005.
A mode S transponder can be configured to transmit aircraft information including the maximum ceiling, maximum climb performance , aircraft type, flap position etc. This is then interfaced to the TCAS, which in the event of both aircraft having TCAS will determine which aircraft climbs and which descends.
Mode C considered to be a poor mans TCAS as the TCAS equipped aircraft will always get the avoidance manourve.
There has been reports in CHIRP of helicopters flying in the London airports area (Heathrow low level corridor I think) that have just been operating Mode A and as there was no altitude transmission, the TCAS has been giving Traffic alerts while on final.
To me as an engineer, the more info that aircraft can pass between each others avionic boxes the safer things will be, then again I'm biased and trying to keep in employment!!!!
Back in the real (to me) GA world, the cost would be extortionate.