I can't tell you about the old JBL but the JBL in the 2010 is just OK not bad. I like good clean crisp sound so I took everything out and replaced it with all aftermarket stuff. I would say the factory JBL for most people is OK.
I have the radio/CD player in the 2010 Prius II and it works great, but the sound quality on FM radio is only fair. I don't know (yet) if problem is the radio, speakers, or both.
Compared to the Gen II JBL radio, the Gen III JBL system does sound better. The bass hits a bit more and not having that annoying center channel make everything sound overly tinny is a plus. I do think it does need improvement, but it is improved over then gen II IMO.
I cannot comment on the previous models, but my 2010 Nav unit with JBL has very good sound quality to me. I had just installed a Pioneer unit in my Jeep GC prior to purchasing the Prius. The JBL unit in the Prius is every bit as good as the Pioneer unit IMO. I have heard a lot of negative comments about the FM and SAT reception. My reception is great on both. As for the FM, I am able to get stations further away than the Jeep was able to get.
I had a gen 2 navi as a work car for a while and I can say that without a doubt the gen 3 navi that I've had for all of a week now is a much better sounding system.
It's a decent system. It could use some more power and better satellite reception. I think eventually I will be swapping it out for something better.
My biggest complaint is that speaker in the rear door that blasts into my left ear while driving. Does that bother anybody else? Perhaps better placement in a more suitable location would help to improve the overall quality of "Your Listening Pleasure."
