A simple question with a complicated answer. Many tradeoffs, including:
- it is a good idea to live "below your means" in general, so: yes, only as large (and as high performance) a car as you really need, independent of gas price...
- big cars are more survivable in car-on-car crashes (unless you roll your SUV) so: no, independent of gas price...
- unless everyone else gets small cars, which won't happen until gas gets really painful (more so than now), in which case you'll have been ahead of the curve (so: yes, to get ahead of the curve)...
- but sudden changes in gas prices (which happens when people don't look ahead, where we in general are encouraged to not look ahead by advertisers, marketers, and next quarter focused pundits...) can create economic dislocation affecting your income, so: maybe keep your current car and don't spend a bunch of coin on a new car, big or little...
If the rise in gas costs were slow, then industry and behavior would have time to adjust more smoothly: people will relocate so they need to drive less, cars will get naturally smaller, food will get more expensive (but we'll learn new recipes to do OK with whatever it becomes in the US), everyone will groan, but no one will scream. However, that usually is not the case and I don't know how to fix it.
I have over time migrated to smaller cars, but most importantly, I long ago chose to live close to where I (luckily still) work, which is the biggest part of the equation.