There is a difference in concept of engine cooling and cabin heating between the 2nd gen Prius and the 3rd gen. In the 2nd gen, the coolant is indeed to cool the engine and with the heat reservoir to provide heat to the cabin. In the city driving if the engine does not kick in often, it may result in "cold" cabin.
The 3rd gen Toyota redesigned the system so that the reservoir collects heat actively from the exhaust system to maintain the liquid temperature at the optimum level for both engine and cabin. Keeping engine temperature from getting too cold during “off-duty” time saves gas (no cold start). Also, the higher temperature heat reservoir should make the cabin warmer during cold Canadian winter.