We drove our 2004 Prius (with the OEM tires) all last winter in Buffalo without any problems - though we don't venture out until the snowplow comes by. My advice would be to try using the OEM tires this winter and see how you do. I think you'll be fine.
I think they were OK only until I got into deep stuff a couple of times (unplowed parking lots with a new 6" or more)...at which point the traction control rendered me almost unable to move.
This winter I'm putting on Blizzaks...why not, you're resting your other tires, so in a sense it costs you nothing extra, except for the steel wheels, or mounting/balancing if you have them swapped out. HUGE difference in stopping power on ice...see test on tirerack.com. Safety improvement well worth $130 for 4 steel wheels!
I really didn't care for them at all, particularly when it snowed. First time I stopped with the brakes applied heavily in the first snowfall (to get a feel for them) they still slid, albeit in a straight line. :shock: Since we get a lot of lake effect I opted for new snows with wheels this winter. Not taking any chances with $23K, and $490 is cheap insurance plus I can extend the OEMs a little farther out.
I checked Tirerack for steel wheels a couple of days ago and they say they are hugely backordered and won't be available this year (I think they pulled them off their website too). As a result of waiting too long to order them, I'm getting them from a local dealer for $52 each, along with 4 Nokian Hakkapelliita RSi for a total of $598 including mounting, balancing and tax. In Vermont I need the very best since I commute over a mountain pass.
The decision of whether to go with snows all around or only on the drive wheels depends on your location. In your area, snows on the front should be fine, in fact, some go without snows in the Middle Atlantic region and get by with all-season tires. But in Vermont and most of the north country, many people swear by 4 snows (even when you have 4-wheel drive) as there's increased traction and stability even for the non-drive wheels.
The Prius in this regard is fairly typical of other front-wheel drive cars, but may be somewhat superior than most with traction control and even more so with the VSC option.