Where are you trying to go in Oaxaca? The central core of the city with all the tourist sites is extremely walkable. If you want to visit towns in the valleys nearby, the public transit system works extremely well, or you can always take guided tours for a reasonable price.

I spent over a week in Oaxaca city last year and only took a taxi to/from the airport. Everywhere in the city I wanted to go, I walked, and when I went to nearby towns I took buses or shared taxis.