I think the £1 seat sales certainly help to cultivate the image of ryanair as a cheap carrier. Ryanairs last minute and walkup fares are rarely the cheapest option for travel yet many people accept them at face value because they always assume that a ryanair ticket will be the cheapest.
I often wonder how many people actually travel on the discounted fares? I own a visa electron card and go absolutely crazy when they have a seat sale on. I recon only about 1 in 10 seats that I book for myself and my friends actually end up getting used. Ryanair calculate load factors on tickets sold, not passengers flown so I assume that the load factors are artificially inflated by quite a few no shows.
I assume that this also allows ryanair to boast that its average fares are lower than they actually are, since it is dividing revenue between more passengers than it actually carries. High load factors also make it look more healthy to investors (though their profit margins do a good enough job of that already!).