Hybrids do work. In my commutes to work in warm weather I could get 50 mpg in my Jetta hybrid. That car only had a 30 hp motor. You had to have a light foot to keep it going on electric only power. The colder the weather, the longer to heat up and the quicker to cool off, so the engine would have to run. If you ran primarily on the gas engine around town, mpgs were in the 30s. Long highway trips were in the 40s if you stayed within 5 mph of the speed limit (70 mph). I did not drive below the speed limit. So to sum up, in cars like the Jetta hybrid, you had to pay attention to how you were driving in order to get the good mileage. Perhaps cars like the Prius and newer hybrids don't require so much technique.
The cold weather penalty hits my Prius just as hard - my 5 mile one-way commute ranges from the low 50s to the low 60s mpg when it's in the 50s ºF or higher, but when it's below freezing, I'm doing really good to get 40 mpg.
On the highway, I tend to set the cruise for 73 instead of 75, because it means that the engine can shut off going downhill. I'll get low 50s that way, usually. That's the only real technique for highway that I use.
However, the more flexible gearing (the Jetta Hybrid has seven gear ratios to choose from with its DSG, whereas the Prius can set an arbitrary RPM as long as it's within the rev limits of its electric motors) and improved engine thermal efficiency (although I don't have numbers for the Jetta Hybrid's motor, VW would've been crowing about it if they got close to the 38% of the previous Prius's motor, and mine's at 40%) all help the Prius's efficiency everywhere.
And, then, the loss of, oh, 330-400 pounds of curb weight help it in the city, and vastly improved aerodynamics (0.24 Cd instead of 0.28, although it is taller, increasing frontal area a bit over the Jetta) and the ability to shut off the engine as high as, depending on who you ask, either 68 (Toyota official specs) or 73 (my personal experience) mph, versus VW's 44 mph, help it on the highway.
As far as power, I'm actually not sure how much battery power the Prius can get to the wheels, Toyota tends to not like to release those figures. The Li-ion battery has a theoretical limit of 60.1 hp based on the rated cell power, but I'm certain that Toyota's not hitting the cells
that hard (and they still have a NiMH model, too, at the same vehicle power rating). I'd guess, though, based on Toyota comments on how they rated the previous generation and how that affects this generation's power, that it's somewhere between 36 and 39 hp in electric.