The Subs object is just SymPy's way of representing the derivative of f evaluated at x - t (that is, f'(x - t)). We could probably pretty print this nicer.
I believe your derivation is correct. Unfortunately, SymPy's integrate is not so good at applying general rules. In this case, it doesn't know that the Subs object is just a derivative, and after a substitution, can be evaluated by the fundamental theorem of calculus.
However, we know that, and we can tell this to SymPy. If you take just the integral part and use .transform() to do a change of variables, it can be simplified. In other words,
(f(0) + Integral(Subs(Derivative(f(_xi_1), _xi_1), (_xi_1,), (-t + x,)), (t, 0, x)).transform(x - t, t)).doit()
will give f(x).
(you will need to create the Symbol _xi_1)
Feel free to open issues in our issue tracker at http://code.google.com/p/sympy/issues/list for both of these problems (printing of Subs and the inability to do the integral), as well as for any other problems you find in SymPy.
Aaron Meurer