To buy or not to buy?

[Wabledoodle]

So here's the situation:
I have a job that starts this January, for which I will need a car to commute. I currently live in the city, and as a student don't need to commute. I have a 2001 Mercury Villager which my parents are kindly donating to my cause to either drive or sell.
My options are as follows:

1. Just drive the van
2. Trade in the van for a new car
3. Trade in the van for a used car

There are obviously pros and cons to each item on the list. Keeping the van obviously means less cost in the short term. However its a van, which I don't really look forward to driving in the city, and its getting up there in years. I'm terrified that it will break (no problems to date though) leaving me in a tight spot. It only has about 60,000 miles on it, which is pretty good for a car that age and the KBB is about 3,000 I think.
If I trade in for a new car I get the manufacturer warranty, I get the peace of mind that it will run well, I get excellent gas mileage, etc. But I obviously have to pay for a new car.
If I trade for a used car I alleviate my concerns about the car breaking on my, but not as much as a new car would. However it will obviously be cheaper than buying new.

I think I've narrowed it down to a Yaris however any other advice is welcome (I'm saying this knowing I'm posting on a forum called Yaris world so we'll see what I get from that).

If I were to buy a used car, I would probably shoot for a Toyota certified one just to add some peace of mind. What year/mileage would make it worth the difference from a new car?
Theres a 2007 3 door with about 45,000 miles on it that's going for about $10,500 at a dealership just down the road from me that seems like a good deal, but I'm questioning if thats too old or has too many miles for it really to be worth the money vs just getting a new car.

Any advice is welcome from those of you with more years and experience than me, but please keep in mind that I'm a student who doesn't have unlimited funds.
Thanks in advance.