I just traded in my daily driver 2006 MB 320 4-matic on a 2007 Touareg V-8 4-WD. I LOVE
it! So far I have used it to tow twice - including once in the mountains to Steamboat Springs. It towed our 1956
Safari (3200 lbs+/- fully loaded) like a champ - 60-62 mph uphill, w/ the A/C on. Which was a huge relief to me having towed with a 1963
Suburban for the last couple of years. The 'burb is very cool, but not as our only
tow vehicle option in the steep mountains we usually camp in. My Touareg is rated for 7,700 pounds - and we are well under, but it is great! I wouldn't go any longer than a Tradewind (25 ft), but the wheelbase is better than most other smaller SUV's - the wheels are out at the corners more than other comparable sized SUV's.
The best thing is, it's a nice daily driver that doesn't feel like a truck IMO. Yes, my MB got better gas mileage, but for a dual-purpose tow vehicle, the Touareg is awesome
We use a weight distributing hitch - but I understand VW doesn't recommend it with the air suspension option that we don't have.
We also have several Airstream towing friends w/ both the V-8 & the TDI-10 that love theirs too.