Public transportation works when there are lots of routes, good timing, and it runs efficiently. The paradox is that large cities have more stops, more streets, and unless there are more "express" routes, a bus or train can take much longer than going by car. People tend to wait until the last moment, and time is one thing everyone values above all else. Cars help us get to short distances faster, period.
A town like Gainesville (population 100,000) ran their bus system very efficiently and conveniently. I used it to get to school, since I'd spend 10 minutes getting to school/work and 20 minutes wasting gas looking for a parking space, and still walk half a mile to my class or workplace. Meanwhile, I could take the bus for free 99% of the time, and walk a little less in comparison, and save headache of parking. No, the seats aren't comfortable; yes, at 5pm, the bus could be packed with 50 people...And on rare occasions, it ran late or was "full". But you couldn't beat the price and lack of wear-and-tear.
Public transportation works only if planned to a tee; some places are naturally suited to public transportation, but sometimes suburban planning makes travel by foot or bike to shopping centers difficult or much more time-consuming.
Yes, walking and biking will cost you less money, but it will cost time. But gas has to get very expensive (add 1.50/gallon, in my case) for a new car purchase (plus savings in tag, insurance, maintenance) to outweigh the cost of fuel and a fuel economy increase. And that's by switching to a car that gets twice the fuel economy of my car.