im also going to look at the DriveE volvo s40/c30 as well as the bluemotion golf and polo. all do 70+mpg combined, in fact the polo does 80 apparently. Free tax and low insurance etc. it all seems fairly appealing.
my worry is the volvo will depreciate really quick and the golf/polo will be boring as beige.

the Mini does handle really nicely, i test drove one just after i posted and liked it!