"Yaris. It's A Car."
Or, to quote the ever snarky Car And Driver, "Yep, it's a car. There's not much else to say."
In other words, Toyota is making no effort to build an interesting small car. They are relying on their reputation for safe, comfortable, reliable cars, and a little bit of styling upate, to try to compete against a very hot small car marketplace. Meanwhile, Fiat 500 brings style and cute by the bucket. Ford Fiesta and Mazda2 bring sharp styling and zippy handling. Honda's Fit brings excellent packaging, good handling, and good fuel economy. Chevy Rio brings interesting styling and promises strong performance.
So why the capitulation? The b-car space is going to become more important as fuel economy targets tighten, it seems odd that Toyota would hold back. If I had to guess, I would say that Toyota was saving its powder for its refresh of its key product, the Camry.