Makes sense if you ask me.
Take the average 2 child family. More than likely you might bundle the childrens' clothes in with the parents'... Therefore, that's two seats down without posibility for money generation. On the whole the major costs when going on holiday are accom., food and drink. Do you think the average non-aviation enthusist, lager lout Brit is going to research baggage fees of on average e15 when the hotel costs e1000/week?
Another reason to put on my 'why is Ryanair doing so well' list!