I have a 2009 Prius and a 2011 JSW TDI. They are both high mileage vehicles, but in different arenas. The Prius in the king in the city and the Jetta is the master of the freeway. The tank average for city driving in the Prius is 50-MPG with the air conditioning running and 60-MPG without the air conditioning.
The Prius MPG are hit hard by longer warmup cycles, as the engine has to reach a certain temperature before the it will start cycling the gasoline engine off. This is better managed on the 2010 and later models via a 'forced' electric mode button on the dash.
As for driving, the Prius has enough power and 'instant on' torque off the line, but it is not a sporty feel. Driving a Prius is fun when you pulse-and-glide and actively monitor the power flow so as to maximize regenerative braking, electric only driving...and maximize your MPG. It is kind of like a video game at times.
But the JSW TDI is very sporty, less technical, from a driving perspective, and when you learn how to play the pedal while maximizing your instantaneous MPG on the dash, you can close the MPG gap on the Prius.
As for interior storage, the JSW has more interior room, but the Prius is like a clown car and you can pile a great deal of stuff inside when you drop down the back seat. As long as the hatchback extension doesn't eliminate the ability to drop the back seat flat, the storage capability should be better.
However, if you hold out for the plug-in Prius, the TDI will loose the MPG competition as the city MPG, if you do a lot of short trips, will increase sharply. I am hesitant to say how much, as there is no clear standard how to compare a full time burner with a full-hybrid (electric only mode capable) power train system.
But don't forget to amortize the cost of the Prius with the MPG. And the same for the TDI. When you boil it down to cents/mile to operate, this is the true operating cost.
When gas prices boomed a few years ago, the Prius was a waiting list only item and the dealers were charging MSRP "plus", with a range of $2K to $5K over MSRP. The next generation of Prius, especially the plug-in, may see the same MSRP "plus" pricing.
My bank has a "buyers agent" program and I picked up my 2011 JSW TDI for $400 "below" MSRP. I would see if your bank has the same program, which could cut several thousand off the sticker price for you.
Bottom line, city only driving the Prius wins and the DPF regeneration cycle on the TDI may be problematic for you. Windy roads, highway...the sporty TDI is a blast and gets good mileage. I have one of each, so a short trip for groceries I grab the Prius key and for a long drive, with the panoramic roof opened to complete the sporty driving experience, I grab the TDI keys. At least when I can claw the TDI keys out of my wife's hand - she is the speed demon in the house and loves to drive the TDI.