Yeah but ...
With a hybrid you still have the same IC engine efficiency (the output mechanical energy now being used to turn a generator, rather than a gearbox). On top of that you have the fact that the generator isn't anywhere near 100% efficient, nor is the battery charging process (from memory you have to put in 10-15% more than you get out again). And then you've got the losses in the electric motors themselves.
Cumulatively, I'd be willing to bet that lot is a bigger loss than a modern gearbox between the same engine and wheels. As mentioned, the car would be a lot lighter too without the banks of batteries, which would further help.
Now regenerative braking may help a bit, but I suspect it's not particularly efficient (it's going to be subject to the same generator and charge process losses mentioned above, at the very least). And obviously usage and driving style comes in to it hugely. On a long motorway run you have zero regenerative braking.
Remember the Prius recording worse MPG than a BMW M3 when both were driven in formation for 10? laps round a track.
Other people buy large 4X4 vehicles without the slightest intention of ever using them off road.
Some people have large prestigious saloons with blacked out rear windows while labouring under the delusion that passers by would have the slightest interest in who is sitting in the rear seat. 
It's all to do with using an image to sell people cars. Purchasers will then justify their purchase by buying into the "lifestyle image" the car projects. 
I suppose the validity of any design is how close it gets to delivering the promise of its design. Judged on that basis the Prius is probably a "qualified commercial success" no better or worse than many other cars.
