The IS will probably keep up with the CTS despite the 5 hp differnece. I don't know the weight of the CTS though. Since it's a Cadillac, it's probably heavier than the IS. One thing's for certain: The IS will eat up the CTS in the twisties.
The CTSv will be one of the best performing factory sedans out there, but the regular 2004 CTS with 255 hp won't be bad (stick will still use 220 hp engine). I test drove the current 220 hp CTS with automatic, and the engine feels strong and the handling is good, but not quite as sharp as the IS. The CTS is a little bit bigger and roomier. I prefer the interior of the IS, but I think the CTS is a great car overall. Quality on that car has been first rate.
I have both cars as a matter of fact. The decision mainly comes down to whether you're looking more for sport or luxury. The IS300 looks much sportier and handles better, but is not quite as refined on the interior. Little things in the CTS like memory seats and the faux maple trim add up to create a nice overall package, it also come across as being targeted to an older buyer.
it's not all about hp. maybe you should drive them both and then decide. you're numbers don't take weight into consideration, nor balance. of course if you're just looking at straight line performance, you probably drag your knuckles and should buy a mustang.
Looking at pictures of the CTS interior, it looks pretty cheap. I don't know if the leather on the seats are top notch or not, but the plastic around the dash and center console seem to look a little like the Altima.