I just bought a used (1997) VW Golf 1.6, manual transmission, here in Iceland... and the thing runs like a champ. Has about 80,000 miles on it, gets between 30-40 mpg regularly (unleaded), even after 10 years. No way I would buy a hybrid if its mileage wasn't any better than a 10 year old VW. The last owner told us that it was getting close to 40 mpg highway driving, and I've seen it with my own eyes. I'll take this car over any new fancy thing any day.
Also, why don't more people drive diesel? My mom also has a VW Golf, bit newer than mine (2001?) and she gets insane mileage in that thing. One fill up on her diesel tank will get her at least 450+ miles, which beats any hybrid I've seen. I know diesel exhaust isn't the best for the environment
but if people are looking purely for higher MPG, then diesel seems the way to go.