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Good mass transit trumps a hybrid anyday. Note that I said "good". Like in NYC and a few other select areas. There have to be trains running every 10 minutes that can take you where you need to go quickly and without too many transfers.
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Right, the thing about New York and other major cities is also that driving is not a very good option, either.
Now, where I am, Southern Orange County California, there really are no viable transportation options other than driving. With Urban Sprawl, everything is far too decentralized for bus transit to work, even things like grocery stores are a couple miles away (and from our house, downhill about 700ft as well) so a car is necessary to carry purchased goods around.
Given that though, the HCH is working out well for me. I get around 54mpg despite living on top of a big hill and taking lots of short trips (straight up and down is just under 40mpg). With regular gas at $2.70 almost, the good FE saves a lot of money, considering everyone's in the same boat for long car trips/commutes around here.