That's what led me to think this, but if I understand the system correctly and this is what Woz is actually talking about then it's not a "bug," just poor design (which could still be considered a bug, in some sense). Now, I'm not 100% certain about this being the case, but this is based on my experience with my fiancee's Prius and how its cruise control SEEMS to work.
The Prius only usually takes one tap for one mph, as far as I know, it just takes a moment and this is not readily apparent. You're going 50. You hit the button and don't notice a difference, so you hit it again, and hit it again, and by now it's accelerated 1mph. So you go "Ah, I see, 3 bumps = 1mph," when in reality you've just told the car to accelerate to 53, which it is still, gradually, doing.
So you hit it a bunch more times, and by the time it's actually at 53 you've told the car to accelerate to, say, 60. The car is still accelerating, but the Prius's cruise control is very slow, as I've noted before, so you may not even realize you're still accelerating. Now you want to get to 55 so you hit it 6 more times, but now you're at 54 and the car thinks you want it to go 66, so it, noting the disparity in requested speed and actual speed, changes the gear ratio and accelerates more rapidly, jumping up 11mph very quickly.
The fact that he says he has to tap the control again and again is what makes me think this is the case. If so, it's poor design on the part of the cruise control, but it WOULD still be working "as intended."
Also, to the guy above complaining about criticizing other people's grammar... that was me, correcting myself. Rancho relaxo!