We looked at a number of small SUVs and wagons and went with the Outback for a number of reasons: comfort, MPG, and functionality. The other small SUVs did not ride well and seemed cheaply made (including Toyota and Honda). The ride quality in a wagon is way better and does everything I need it to do. MPG (28 hwy, 22mpg city) has been better than advertised, which is rare. Great resale in Colorado and low operating costs. Only 500 miles on it so far so I can't comment on long term reliability.
MPG, space, all-wheel drive, ipod connector.
Stereo not that great, seats could be a bit more comfortable in back.