I dunno I just filled up for $1.89 at flying J in virginia... people have pretty short memories. I think until gas prices get up and stay up, people aren't necessarily going to flock to smaller cars unless the industry makes them (or makes it more attractive for them to) do so.
I thinks sales of the Honda Fit prove that you don't necessarily have to be the cheapest if your quality is good and you are offering nice interior, sporty handling, on top of the whole good MPG small car deal. Having said that, I see a lot more Aveo's, Versa's, and Yaris's than I do Fits. For the price of a fit you can buy a Cobalt, Sentra, or Corolla, respectively. And I see a lot more of those than I do any of the subcompact group.
Cars are demand driven to a certain extent (there is the whole argument that the public can't buy a car that isn't offered, etc, but lets skip that for now) and I think the sales numbers show that as long as prices are similar, people will take a corolla over a yaris, or a civic over a fit. People like the space, the styling, the safety, and the comfort. And with gas at two bucks a gallon again, MPG isn't driving that many sales, especially with trucks and SUVs sitting on dealer lots with $5000 incentives and factory rebates.