I think that the potential for a co-operation, or maybe even a merger between bmibaby & germanwings would be hugely benefitial for all of the airline's involved, and passengers also.
If you look at how germanwings has grown over the last two years, it has been incredibly successful. They haven't dropped any of the routes they've launched from Koeln whilst still in competition with HLX (like baby's been with Go/Easy), which they've done with a modern fleet of A319s. germanwings offers a varied route structure to all sorts of places across both Eastern & Western Europe, a varied & stable route structure and a modern fleet would definately benefit bmibaby.
Finally, for the airlines involved it would create a low fares airline from the Star Alliance, which would have much more bite than two smaller low fares airlines against Ryanair & EasyJet.