We bought our '05 Prius for my 4'9" wife and she has no problems with pedal reach or visibility. However, I am very uneasy about how close she must sit to the steering wheel (within six inches), since this model does not have the advanced airbag system.
I had planned on waiting a few years before replacing our other car, but I'm thinking seriously about getting her an '06 Prius right after New Years for the extra peace of mind (and tax credit).
As I enjoy a towering stature of 5'3" and lean my seat back further than Kathy does, I have no problem keeping the steering wheel at least a foot away from my face or torso. I guess I'll be inheriting the '05 Prius a bit sooner than I expected. Darn the bad luck.
I am under 5' but I am an unusual case. I have a very short torso, so I need about 5" of telephone books and cushions. Fortunately, I have long legs considering my body size, a 30" inseam.
I can drive the car without any problems with regard to the pedals, and I do not have my seat as far up as it can go. I am probably 1 or 2 notches back.
I don't know what you would consider an advanced airbag system, but the driver airbag is 2 stage, and there is a seat position sensor to determine how far forward the seat is, in order to control airbag deployment.