I think it would depend on whether or not your garage is heated? If it is, I probably wouldn't worry too much about it. Do you feel cold coming through or around it in the winter months?

Also, I think a pre-hung might be easier unless the hinges line up perfectly or the sizes are the same it will probably be harder to retro-fit a new door to an old jamb than just replacing the whole thing. Also, you might not get the best seal around the door. Just my thoughts though...

Depending on local codes you may be required during a remodel to put in a metal door for fire protection - we were!

The door jam is either fabricated for the present door or it came prehung as a unit. It is highly unlikely that a new steel door will line up with the existing hinges on the present door jam and most often steel doors come prehung on a metal frame. You can purchase wood doors and mortice them to match existing hinges on the wood frame. You can't do that with a metal door. Also, the metal door will more than likely be thicker than the pine door so it probably won't fit the frame regardless.

We were required to have a fire rated door. 20 minutes, I believe. It did not have to be steel. We were also required to have self closing hinges.

Same as sue36, here. I had to have a fire rated door. One problem I had with my door was that it was too low (and it was ugly.) My contractor raised the door about an inch and now I can have a thicker rug on the house-side. Before when you opened the door, the rug was pushed out and got stuck underneath because the clearance was bad. It is those little things that make a remodel worth it.