Yes, I think the bubble will evetually burst in the sense that many of the low-cost airlines with us now will either close up shop or be absorbed by someone else - it's already happened in the UK with Go and Buzz.
Having said that, I still think:
1) There is still plenty of market left - especially with eastern Europe, and the enlargement of the EU next May to incorporate 10 new countries
2) The low-cost market is here to stay - some airlines will disappear, but a few strong players (perhaps some of those existing now) will continue to be immensely profitable and popular
I can't help comparing the situation now with what occurred in the US after deregulation. Of course, Europe still has its state-owned players, but these are struggling.
I wouldn't like to put any figures on it, but I'm fairly certain some downsizing will occur in the future.