Isn't a diamond tool one that mines hard materials more quickly?
I mean for the merged tool to perform the same as it's components, but lasts longer. eg 9 iron picks makes a super iron pick, that performs exactly like a normal iron pick, but lasts 9 times longer.
There are five versions of every tool:
(Gold tools are pretty damn worthless, though.)
The main difference between them is how long they last. Wood tools don't last very long at all, while Diamond tools have over 1000 uses before they crap out. The other difference is what they can mine. Wood tools can't mine very much at all, whereas Diamond tools can mine anything, and are in fact the only way to mine obsidian. There is a speed difference between how quickly the tools break blocks but I wouldn't say it's incredibly significant. Still takes a diamond pickax almost 20 seconds to break an obsidian block, but it's your only option.
The most efficient tools are stone tools, in terms of the ubiquity of their materials, how long they last, and what they can mine. Iron tools are also a necessity to mine redstone, gold, and diamonds, but since iron is relatively rare you don't want to use iron tools for everything, just what's necessary.