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Of those brands, which I think are the best in that price/size category, you're looking at a VW Rabbit or Jetta (same car, one's a hatch, one's a sedan), Mazda3, Subaru Impreza, Honda Civic, or Nissan Sentra.
VW Rabbit/ Jetta: These cars are excellent, and although they tend to cost a bit more than the competition, they are also the most refined, upscale, richly appointed cars in that price class. The hatchback Rabbit starts around $16K and comes with a decent level of standard equipment. Likely option packages that'll boost the price to $18-20K will include alloy wheels, sunroof, iPod connectivity, and a 6 speed automatic transmission. Dynamically, they're pretty close to the head of the pack with a nice balance between ride comfort, chassis solidity, and capable handling. I believe the current standard engine option is the 150 HP 2.5L 5 Cylinder engine that's actually derived from half of a Lamborghini Gallardo's V10. But don't think it's a sporty engine: it's large size and low-revving character endow it with big, punchy torque, but it runs out of steam by 5000 RPM, and as a result, is less fun to rev than less powerful competing engines. With that said, any minute now, the 2008 model should be available with a 170 HP version of the same engine as standard. The extra 20 HP are likely derived from a bit of higher-revving capability, and thus, it's big torque will finally be matched with equally good Horsepower. With either engine, this car gets by far the worst fuel economy of the bunch--down into the low/mid 20's city and not even 30 highway.
The Mazda3 is my personal favorite because it's built to a similar standard of high-quality materials and fit/finish, inside and out, to the VW, adds a bit of styling flair, and adds a bunch of handling flair. The Mazda3 is probably among the best handling front-drive cars available at any price, and nothing in this price class can touch it's brilliant steering and taught cornering. The base engine on the sedan is a decent 150 (or so) HP 2L 4Cyl. It's just fine with a stick, but (i'm too lazy to check to be sure) I"m pretty sure all 2L Mazda3s come with a 4 speed automatic if so optioned. The 4 speed's more widely spaced gears make the relatively low-torque engine struggle to feel quick at low RPMs. Optional on the sedan, and standard on the hatch is the 2.3L engine that add just a few more HP over the 2L. But it also has a bunch more torque, which combined with the optional 5speed automatic, makes for a much peppier-feeling car. The only major option package that you'd "need" on the Mazda is the abs/traction control/side airbag package that pushes the price of most models up to around $18K. For $20K, you can add a sunroof, better stereo, bigger wheels, etc. However, note that the hatch already comes with big 17 inch wheels, the 2.3L engine, and a few other features. It's base price is more than the sedan, but you won't have to add as many options.
The Subaru is in transition. The current Impreza is a more than decent car. It's the only one that even offers AWD, which happens to also come standard on all Subarus. It's also a very nice-handling car, as it shares pretty much all of its parts with the hot-rod WRX. They're also notoriously bullet-proof, and Subaru loyalists certainly love the husky sound of their big 2.5L 170 HP flat-4 engines. But because it's a pretty old design, having been introduced way back in 2000 or so, its interior design and materials seem outdated. Also thanks to its old bones, is a generally lower level of percieved "refinement." Wind and road noise is a bit more than others, and it doesn't quite achieve the near-perfect ride/handling compromise that the VW and Mazda do. Your price range will put you in a very nicely equipped model, though it may not come with certain modern features like iPod connectivity or an MP3 CD player. A new Impreza is on the cusp of its debut, however, and from pictures, it appears to have a much-improved interior, and a very different, more rounded and integrated exterior while retaining the same basic engine.
The Honda and Nissan are my least favorite of these cars, but not because of any quantitative inferiority on their part. The Civic certainly has a fresh-looking exterior, but I find the space-ship-like interior to be just too weird for me. It's swoopy dashboard incorporates a digital gauge cluster way out where the steeply raked windshield meets the dash, but then has a big analogue tachometer tucked right behind the steering wheel. As someone who always drives a stick, and drives briskly enough to need an easy-to-read tach, I find having to refocus my vision from the far-away speedo to the close-up tach distracting. But aside from that, it's an extremely well-made car with great steering, nimble handling, and lots of space in the back seat. Its 140 HP 1.8Liter engine is revvs freely, but isn't nearly as gutsy as the others. On the other hand, it gets really excellent gas mileage--much better than the others.
To me, the Nissan is dull. I haven't driven one yet, but the automotive press has unanimously criticized it for floaty, sloppy handling. It's smooth-riding, however, and the interior has a nice "cozy" feel to it, with all controls and switches in perfect and easy reach. Its 2 Liter engine splits the difference between the bigger Mazda, Subaru, and VW engines, and the small Honda engine. But a CVT transmission is the only automatic available if you choose not to get a stick. I don't like CVTs, and have yet to drive one that doesn't drive me nuts.
All of these cars should be highly reliable, with one exception. VW has not had a particularly good reputation with its Jetta's and Golfs of previous generations. Typically major components are bullet-proof, but small electrical glitches occasionally cause repeated headaches. Depending on how long you plan to keep the car, an extended warranty should ensure that you'll never have to pay for an expensive failed window lift or failed dashbooard lights, or something like that, but it may be a nuisance--maybe. Engines, transmissions, and basic chassis hardware are typically very long-lived.
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That seems like a very good price for that car. I'm particularly fond of the Legacy. I think it's a classy-looking car with a BMW-like "personal" interior with high-quality materials and attractive shapes. It's a well-engineered car with a sophisticated AWD system, a unique "boxer" engine, and sophisticated suspension that delivers excellent handling. Legacy's are also highly reliable, long-lived cars that have attracted a devout, almost cult-like following. Free oil changes are surprising, and icing on the cake. And especially worth-while are the free tires. Tire changes can be a bit tricky on any AWD car. If some tires are significantly more worn than others, their overall circumference will be different enough for the AWD management computers to become confused, and think that the wheels with worn tires are always loosing traction, since worn tires (with the lower circumference) will spin faster than the rest. Rotating your tires frequently and monitoring their wear will prevent this from ever becomming a promblem. But every once in a while, if a tire needs to be replaced prematurely, a new tire may be too "new" for the AWD system to work properly without showing a warning light; thus, ALL tires would need to be replaced to make them all of equal wear. This is rare, and I'm not sure how sensitive Subaru's AWD system is, but free sets of tires from a dealer add yet another level of protection against unexpected expenses.
The only thing that turns me off about the Legacy is its automatic transmission. Unlike most of its competitors, it's a 4 speed unit, which means that each gear is more widely spaced than those in a 5 or 6 speed, which are becoming the standard for midsize sedans. As a result, the otherwise robust 170 HP engine can feel a bit weak in certain circumstances. Drive one, and see if it's an issue for you. I suspect it's not, and everything else about the car is really excellent.
So go for it.
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