Probably not the way I would code it from scratch, but I can't actually see anything wrong with your original code. A simplistic test shows that it works as you'd expect.

The print "Creating node..."; will be reached if $path doesn't exist or if $path does exists and the user responds Y to the prompt.

package Test::test;

sub new { return bless \rand, shift; }
sub exists{ shift; shift(); }
sub createNode{ return print 'Node created'.$/; }

package main;
my $xp = Test::test->new();

createPath( );
createPath( 'test');

sub createPath {
  my $path = shift;
  if ($xp->exists($path)) {
    print "Path already exists, overwrite element (N/Y): ";
    my $response = <STDIN>;
    chomp( $response );
    unless (lc($response) eq 'y') {
      print "Path creation call will be ignored\n";
      return 0;
    }
 }
  print "Creating node...";
  $xp->createNode($path) or die "Could not create node: $!";
}
__END__
c:\test>junk
Creating node...Node created
Path already exists, overwrite element (N/Y): y
Creating node...Node created

c:\test>
[download]

With regard to the chomp question, you could do chomp( my $response = <STDIN> );. Whether this is 'better' is your decision.