The V70 is going away for the USA market, just the XC70 in 2013. The larger 3.2L engine does take more fuel, but it is a pretty good compromise with power and torque. Finding a V70 with the 2.5L 5 cyl engine is getting harder if you are looking for low mileage and pre-2008. The EPA fuel figures are pretty pessimistic and you should do better than that, figure about 20mpg around town and mid to upper 20's on the highway with the 3.2L.

You cannot compare the Outback to the XC70, except the AWD. My daughter has a 2008 Outback, the seats are not comfortable, it is noisy, and the newer ones are very tall. Mpg for the Outback is pretty good if you don't cruise fast, but throttle response for a loaded car is pathetic. Not sure about what happens after 100K miles, but the headgaskets do fall apart with age. The timing belt/water pump change is a royal pain.
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My name is Klaus and I am a V♂lv♂holic

We bought a new Volvo XC 70 FWD less $1000 loyalty rebate and $860 for two payments rebate - $28K with 5 year wear and tear warranty. We went shopping for a $24k used car and couldn't resist getting this new one.

Our total mileage for 1500 miles is 24.5 Our best on a 75 mile trip to CT is 28.5 by Volvo's computer.

We are going on a trip soon, I'll let you know.

BTW I get pretty good mileage on the highway - My best is 28.9 for 3500 miles loaded with stuff to the roof going to Minnesota, half full on the way back in our 855R.
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'96 855R,'64 PV544 driver, '67 P1800 basket case, '12 XC70, the first three are mine, heh, heh, 525,000 miles put on 10 bricks

a 2000 V70 AWD i picked up a few weeks ago for $4k gets 22~24mpg combined driving, and almost 27~29 on highway only...
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-woodsy; 245k 1995 850 wagon; 123k 2000 V70