If an automatic Corolla sedan suits your needs, I'd say get that. While the gas mileage might be less, I've seen new, stripped Corolla CE automatics with cruise control advertised locally for $14.5k. A manual would be even less and get better gas mileage (provided you can find one).

Compared to a $23.5k Prius (even with the $3150 federal tax credit), you may not see the $5500 difference for many years to come (if ever). And even though the Corolla CE might be the 'strippo' version, it's still a very nice, reliable car (with good gas mileage) for the money.

If, however, you need a bit more space, the Toyota Matrix (or its twin, the Pontiac Vibe, both of which are essentially Corolla station wagons) is a more valid comparison, and the price of one of those (even a comparable stripped version) is up to several thousand more than a Corolla sedan.

Using the more equivalent Matrix (or Vibe) in a comparison with a Prius, the price difference isn't quite as dramatic, and the Prius might be the better buy in that instance (if you're still eligible for the tax credit when you buy it).