.223 Remington = 5.56x45 NATO
and no, the 5.56 M16 is not designed to wound... at the 950 m/s it does, the bullet fragments while the temporary cavity (tissue displaced by the impact) from initial bullet impact is still more than fist-size -> very fatal internal wounds.
That's the problem with the M4, where bullet velocity drops under the about critical 900 m/s too fast, causing the bullet not to fragment and penetrate through the target -> small, nonfatal puncture.
As always with weapons of war, they're designed to DROP THE ENEMY (not necessarily kill, but DROP THE SOB right there)
A good link to get started on terminal ballistics:
http://www.molonlabe.net/johns/terminal.htmAlso, M16A2 limits fire to single shot and 3rd-bursts, to prevent the
ami wimps 
from just spraying empty the magazine to no effect from prone position/foxholes. M16A1 still has full auto.