What I wonder is whether the Insight would have sold better if this new "value model" was introduced in the first place. The main complaint against the Insight was that it was not much cheaper than the Prius (regardless of whether or not the stripper Prius model was actually available on dealer lots), and that even for the price, the interior felt really cheap.
Both of these things are probably improved by now (I would assume that little interior changes, like those damn AC vents wouldn't be mentioned in the press release), but considering how far behind Insight sales are, I don't think it can really recover.