Is it a mistake to get a gen 2?

No. It's not a mistake. In addition to all thats been mentioned..... It's great, practical, cute & Proven!
2007-09 are best because they worked out all the bugs from 2004-06.
Gen 2 will also be a little cheaper..... Try to find one with under 100k

 

Some gen 3 cars seem to have windshield problems at night time:

2011 Prius - Windshield triples light source images | Page 16 | PriusChat

 

Gen II Owner
So I'm partial to my chick magnet.....

Seriously...the flying buttrest thing.....was such a bad idea...Looks completely claustrophobic.....
plus you lose the secret hiding spot drawer under the console and who of us isn't hiding something in there?

 

Who, indeed.

 

I loved my 2006 package 3. With more than 3 years in my 2010 V-AT I wouldn't want to go back. You can't go wrong either way and both cars take some getting used to. In the end it will probably come down to which gizmos you want/need as the two generations just don't have the same equipment available.

I don't believe handling is an issue. A Prius can hold its own in an autocross with a Leaf, Jetta, and Model S.

 

Damn my secret drawer is not longer a secret.