Your letter is misdirected. Theletter should go to the employer and not Paychex. Paychex will not allow any of the Vanguard funds in their 401k product. The reason is that Vanguard will not pay Paychex for doing so. Curreentl Paychex only offers 3 fund families that I am aware of. Your employer had a choice of Fidelity Advisor, Merrill Lynch, and Salomon Smith Barney. Merrill offers an index fund, its expense ratio is aroun .38%. However, the other funds from Merrill have poor performance.
Paychex marketed their 401k very heavily to its payroll clients last year, their main theme was if you have a good transfer from payroll to your 401k, you have a great 401k. Obviously this reasoning is flawed.
You and the other employees should ask the employer to switch providers. After all, the 401k is YOUR benefit.
Your employer has a fiduciary liability to run the plan in the employees best interest. Make them aware of this. Let them know the employees want a change. If confronted by a few employees, the employer will usually change plan providers. Tell your employer you want a low investment cost provider. You can try Vanguard, T.Rowe Price, Fidelity, & American Century. Check these fund families for an index fund.
If your employer objects, post a follow up, and we'll try to find answers to any objections your employer may have.

Bill