I've always used the Mercenary's Grenade Rifle, unmodded, 40mm. It works nicely against Legion hit squads (being on their crap list as usual, heh!), but I'm considering the 25mm Grenade APW or Grenade Machinegun instead.
While I know the 40mm causes more damage per shot than the 25mm, is the firing/reloading rate of the 25mm faster? I do like the ammo variety in the 25mm, but if there's no real benefit in terms of speed, might as well stay with the 40mm.
Should note I don't use it often, but when I do... useful.
(Current weapons loadout: Gobi sniper, Brush gun (modded), 12.7mm SMG (fully modded), 40mm MGR.)