The 2004 is safer in a collision.

The side impact bags (SIPS)in older Volvo only protect front
occupants and do not offer any head protection until model year
1999. In 1998 the B piller was strengthened to give the side
air bag more time to work (they are mechanically triggered from
sensors in the seat so the seat starts to crush as the bags are
fired). Newer side curtain designs are much better.

Even though T-bones collisions are 25% of all crashes
they account for one third of all deaths
(http://www.firehouse.com/extrication/archives/1997/may97.html).
I'd also say 25% means side impact collisions are common.
And with all those SUVs with their bumpers pointed at car occupant's
heads probably means the death rate isn't going to change for some time.

When time comes to replace our 1995 855 and 1998 S70 I will want
a car with the latest side impact protection (regardless of possible
maintenance costs over an older model). Obviously it is not a big
enough issue for me to trade in now; but side air bags are a
requirement for my next car.