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What year S70 do you have...turbo or not? Have you set any codes...check engine light on? If so, get the codes read and this will also give you a clue as to what's wrong.
I wouldn't think the temp sensor and thermostat would account for really bad gas mileage, though it may have some impact if really shot. So, yes, a tune-up is probably in order- Spark plugs, ignition wires and rotor cap are my first bet as well as a dirty throttle body, and clean air filter and possibly a fuel filter.
You mentioned no vacuum leaks, but just to make sure, have you checked the elbow connectors around the sides of the intake manifold? Also, check all of the hoses by pinching them with your fingers to see if there are any cracks. They tend to crack near clamps as well as going soft. You can also diagnose vacuum leaks by spraying carb cleaner on the hoses (use the small straw that sticks into the spray head so you can focus the spray) and with short squirts spray the hoses where they are questionable with the engine running at idle. If there are leaks, the engine will surge as it sucks in the spray. Others have mentioned doing this with propane but the spray can method is much easier and you'll be able to pin point exact locations.
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1998 S70 T5 Emarald Green Metallic, 2004 V70 2.5T Ruby Red, Previous Owner of Black '94 850 Turbo Wagon. My cars have been running so well lately they've got me worried.
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