This is obviously wrong as shown by functioning public transportation systems in large cities like Berlin, with busses, trains and undergrounds every 5-10 minutes. The transport system isn't organized as a complete graph, but instead looks something like a powerlaw distributed graph. The diameter is still small, but the number of lines stays linear.

I think it's only true up to a certain value of n. Once the mass transit system has a subway system that has a train every 5 minutes and stops at most a block from any given location, it makes very little sense to drive. When I visited Hong Kong, it felt like this -- massively convenient and efficient. No time wasted looking for parking under $20/hr.

The network doesn't need to be n-to-(n-1) - it can't be "ride to this single central hub and wait an ungodly time for a connection", either. Looking at my city's public transit, I see a dense interconnected network - denser the closer to the center you get - with branches and leaves off the edges; rapid, high-bandwidth transit (underground rail - with stops relatively far away, but still more or less walking distance, from each other; plus normal trains with stops every few klicks) and slower, smaller forms of transport with stops closer to each other (light rail and buses). It's fairly efficient - I can get within walking distance of almost anywhere with 2 transfers, and anywhere with 3 (with transfer times <5 minutes); it outperforms cars on many trips (what with congestion and whatnot). Alas, it gets about 70% of funding from city subsidies, so extension and maintenance is a huge pork-barrel issue.

Morsch is right IMO.

I live in Vienna and there are few I can't reach within the city within about half an hour (buses/trams/subways often come in 3-5 minutes intervals too).

Within 45 minutes practically the whole city is covered.