You might have a been quite unlucky with your VW. I had 2 Audi TDI (A3 and A4), and the first had no problem at all and I sold it at 75000 Miles because I wanted a bigger car. The second one, the A4, had only minor electrical issues and it has reached 70000 miles and counting.
In average, I get 60 MPG out of the A4 and was getting 65 MPG out of the A3. So I don't think it is that far from the numbers you give.
And here in Europe Diesel is 30 Euro cent cheaper per liter than petrol.
I never drove a Prius, so won't comment on the fun factor.
1. I'm talking U.S. gallons, not Imperial gallons which are quite a bit larger. Check that your 65 mpg isn't in Imperial gallons.
2. I might have been unlucky, but then so were my three co-workers who also bought VWs. I kept mine a couple of years longer than they did. VW fooled me once but never again--not ever.
3. And yes, diesel is cheaper in Europe. They pay for it with a higher rate of lung cancer. And clean diesel won't help here because it's the very small particles that do the damage. Clean diesel just removes the larger particles.