If you are referring to the manual shifts, then yes, that's not a problem. But then since the problem is with the automatic shifting from 2nd gear, you won't notice it if you manually shift.

Just out of curiosity, would the ECU reprogramming by tuners like Hamann, Hartge or ACS resolve this issue?

i think there are several products to mod the throttle lag.
look up sprintbooster. some interesting posts in bimmerfest and mbworld.
i have no experience with these, and frankly not too much of a prob with
the pedal in our 3.0. actually i was always rather pleased with
the ecu holding a lower gear in local driving on modest incline in D.
SD and M are noticeable improvements though for passing etc.
hell i like playing with the shifter in this thing too. :)

I looked into sprintbooster some time back and even discussed it here at xoutpost. There are numerous other threads here. I found that it has equal number of haters and lovers on this and other forums. Not sure if that would really work in this particular transmission situation, because technically it is not helping reduce the upshift time from 2nd to 3rd, it is just helping you push the throttle more aggressively (electronically) so that the car accelerates faster and at the same time consumes more gas!

I think shifting problem can only be resolved by programming - ECU or transmission?...not sure.

I know there was a ECU/transmission upgrade for older bimmers called shark injector. I searched a lot for its E70 version, but I don't think they make it anymore.

to go into more detail about the lag issue, I feel it's a matter of it not downshifting far enough to lower gears after braking in order to pick up again. In any car, try accelerating from stop in 3rd gear and you'll notice the same "lag". I have "winter mode" for snow traction in another car that does that and it feels just like that. Theoretically a fix should be possible.

While you are correct that a fix probably is possible, it is highly likely that the reason this downshifting strategy exists is because it has a favorable impact on the EPA Mileage tests run by the government. As such, they are probably limited as to how far they can legally stray from the shifting strategy under which the vehicle was tested, i.e., they may know how to "fix" it; however, they may be prohibited from implementing a straightforward "fix."

I never drive the car in normal "D". It is either in D/S or in manual mode and I do not have any issues. The normal "D" setting around town drives me crazy due to the lag.

I've tried D/S but it seems to stick in gears too long. My E53 was better in D/S, felt more aggressive and quicker but shifted smoother without hanging on.

what kind of mpg are you getting around town?