I would recommend it with reservations. I recently drove a Ford Escape while my little buddy was in the hospital after an accident. It was a much bigger car and less fun to drive, but got equal mileage on my commute. I think a better transmission would make this car perfect for me.
We traded my wife's gas guzzling minivan for this vehicle. We have no regrets. My wife and I have two small children. Their carseats fit in the back without requiring the front seat occupants to scoot their seats up to an uncomfortable degree. There is even enough room inbetween the carseats for my wife to squeeze in if the kids need something. Storage space is ample. There's plenty of room for suitcases, duffel bags, and other travel essentials. We have no trouble fitting a week's worth of groceries in the back. Gas mileage is excellent. We're averaging about 31mpg on the highway, which is very good considering that I do all the highway driving and have a lead foot. Cars tend to break in and I expect that figure to go up somewhat. I like the fact that even with $3/gas, I can still fill the tank from fumes on $40. The ride quality is very good for a small car. Its not as cushy as the minivan, but it won't rattle your bones like a stiff sports car. Performance is surprisingly good, considering this car has only around 122hp. Pick up from stoplights is good and the car is fast enough to feel safe on the Chicago area highways, even when loaded with luggage and kids. I only have two complaints about this car. The seat coverings are rough. The seats are cushioned just fine, its just that the material is coarse. Perhaps there is some rationale for the material choice. Its not a deal breaker by any means. The CD player doesn't play MP3s.... in 2007. Luckily my wife doesn't care. I don't see any listings for an MP3 player option, so I don't think its available from Toyota. So if you have to have your MP3 CDs, be prepared to upgrade.
LOVE MY MATRIX! Zippy pickup from stop and quite roomy inside (Actually can get two carseats and room for another passenger in between in back seat.) Front seat roomy too as my husband is 6'3" and doesn't mind riding in it. Lots of trunk space and with the cargo cover, also secure. Great gas mileage. Have even used the 110v outlet located in the dash to use my laptop occasionally. Only problem I have had is blowing fuses for auxilliary outlet . . was told by the dealer that Motorolla phone chargers were notorious for this. Only thing I would add is automatic hatch release from keyless entry.