MTMS4,
The PPK/S is still legal to import. The PPK/S was Walther's answer to the restrictions imposed by GCA'68. Basically the PPK/S meets the size requirements by mating the PPK slide to a PP frame. The PPK has too small of dimensions to be imported.
So the PPK's and PPK/S's that you see from Earl's are German made, however the PPK's are probably pre '68 made models or they were bought from a government or police official, who had a special permit to import the PPK.
Are the German ones better? In my opinion yes. Are they worth the price? That's an individuals decision. The German made guns have more collector value than the S&W or previously made Interarms PPK's. So if you want a shooter or carry gun, I'd say go with the S&W made gun. It won't be as refined as the German made one and some say they don't work as well as the German made guns, but you won't be loosing the value of the gun either when you scuff it up from carrying it around all the time.
Another option would be to look for a well used German PPK. You can usually find these at reasonable prices and you won't loose much value, because the gun is already been used.
Another option might be the slightly larger PP. There are many police turn-in's on the market right now and they're going for as little as $300.
Hope this helps
Devin