Regenerative braking is very far down on the list of values in hybridization. The essential purpose is to use the primary power source more efficiently. Putting a 240 hp engine in a passenger car to cruise around town at 35 mph is extremely inefficient. Using a 50 hp engine to do that is far more efficient, but responsiveness suffers badly. We are in the infancy of hybridization now, but as the power technology advances a 50 hp hybrid can be more efficient than a 50 hp conventional car and provide better responsiveness than a 240 hp conventional car. The difference is made up by stored electric power.
In actuality, a car would have to be pretty small to warrant only a 50 hp engine. The design becomes straightforward, though. The power necessary to climb a 6% grade at the prevailing maximum speed (75 mph in the US) at maximum gross weight is exactly the engine power needed. For a mid-size car that is in the 100 hp range, maybe slightly less.
The side effects of running the engine at higher power levels are valuable, too. Hybridization increasingly separates the engine from the driver control, so there are no issues with suddenly mashing the accelerator. Emissions are much easier to control as the engine comes under computer control.
I can understand why there isn't a lot of enthusiasm for the current generation of hybrids. Not only do they have a limited track record, the level of hybridization is not enough to knock anybody's socks off. (Well, mostly not. See Honda's DualNote
Mike