My pass boss and good friend of mine had an S40 for a few years. I've never heard him grumble about it, so assume there weren't any major issues with the car. Personally, I wouldn't get one because I very much disliked the interior. It's a plastic wasteland.
I had the impression that reliability strongly depended on the engines, and some extra kit; base 4 cylinder petrols with simple stereos are rather trouble free, the turbo diesels with sat nav and other electric gizmos, very much less so.