I like 2007 and up. 2007 was a mid-model refresh and many features were added to the various packages.
If buying a gen III, I'd go with a 2012 or newer because they added bluetooth and some other things as standard, and there seems to be less complaints about rattles and noise than the 2010-2011.
I've heard people say in various parts of the US that the plug-in version is often as cheap, or even priced better than the standard Prius, which is crazy because it gets better fuel economy and has more standard features (NAV, backup camera, heated seats...). Those models began in 2012 and ended in 2015.
The best thing you could do is buy an ELM237 Bluetooth adapter and load Torque Pro on an Android device to read battery voltage and resistance values to make sure they are closely balanced. I believe a ScanGauge will also allow this function. The Prius will not drive at all with a bad battery.
Other than that, the process of inspecting a used Prius is the same as any other vehicle. If you know what the parts of a car are and what appropriate levels of wear is, then you should have no problem. If you don't have that knowledge, then take someone with you that does, or have the vehicle inspected.
I always bring a code reader to see if there are any pending codes; just to make sure the seller didn't clear a check engine light in an attempt to pass off a problem to someone else.
Gen II Package Options
2010 Gen III Package Options