Some people I have spoken to say the problem with the E-Jet is that it needs a little more love and won't go up and down all day like a 737, which is what VOz ops was used to. There is also the issue that when Godfrey bought them, he saw them as a jet that would fly all over the network, including on the transcons, as a somewhat cheaper alternative to the 737-700. That's why why they went with the AR version. And that was fine when Virgin Blue was cheap and cheerful, just a bit harder when you put a halo product on the A330s and tell everyone that you're the Ritz of the Air now.
In my very limited experience of the Jungle Jet as a passenger, it was a great piece of kit that was very comfortable. But, also in my experience, the two times I flew on them the loads were way too light to be economical, which you can blame on the rev managers. Perhaps that is part of a wider issue?