Cityjet flopped because of sky high ticket prices, the 328s never were a cheap machine to run.
As for timing, whilst running a stop in the middle of the route would eat up time, there wont be a big time difference compared to jumping on an Orange Jumbo to Stansted or Gatwick, getting your train to Liverpool St/Victoria and then to Canary Wharf or the Bank area. Depends on where you're trying to get to of course, but it would avoid the hassle of rush hour public transport. Just my opinion anyway..
Anyone remember how BE fared when they flew BHD-IOM-LCY? I only ever flew the route direct, it did well each time I was on it, although that was 10 years ago