At a crossroads with my Prius at 90k miles.

I think your decision is sound. The real differences between a nice new '12 and a spruced up '07 are not going to be that great. Instead, as others have suggested, drop a few $ into your Prius to renew/upgrade it, and enjoy another 90K miles.

In the meanwhile, and on the subject of car payments, years ago I became a strong believer in making car payments to myself, rather than a bank or finance company. Presumably the '07 is paid for. If payments for a new one would be, say, $400 per month, create a special savings account and pay that sum into it every month like clockwork. In four or five years when you really do begin to feel the need to replace the '07 with a new one, you'll be in a position to do so and to pay cash for it!! I've purchased my last three vehicles that way including my '08 Prius and an '11 Tundra after a lifetime of making car payments to banks. One of several nice things about it is that if you have a couple of financially rough months and don't feel as though you can make your "payment", nobody is going to come repo your car!!