The Economist has an article on the Papal diplomatic service and its reputation around the world. To make a long story short, they're tireless and efficient or so we're led to believe.
But what interests me more is the editorial stance of the article to the effect that the Holy See should drop its status as a sovereign entity and start being the largest NGO of the world. But would that be the best method of getting across the Catholic message in an institutional way? Aside from the historical and traditional points surrounding the Papal States, Vatican City and the juridical status of the Holy See, diplomatic status does have its benefits for the Pope's nuncios.
Read and think about it.