Foundation Diggers post misses much of the point. No, Easyjet and Ryanair won't rush out to buy Q400s, they don't need to because they are operating routes which generate lots of passengers. But operate a 737 with 78 pax and your seat cost per mile doubles whereas the Q400 equals that of a full 73. So Flybe are right, for regional airports and low density routes they can offer prices which they couldn't do with a jet.
Regarding tech issues - at the moment if one Q400 goes tech then you will see invariably see a different aircraft turn up, as the other 3 are busy all the time out of BHX. When the 17 new a/c arrive this won't be so noticeable as there wil be more flexibility to shuffle aircraft around.
As for the levels across the channel, the fuel flows don't change much between 90 and (say)150, so it's advantageous to stay low and let the aircraft accelerate sooner. The airborne time from SOU to JER is only about 25 minutes with about 12 mins in the level cruise, so it's hardly worth climbing (although going up to 110 or 120 would avoid the 250kts speed limit).
In the end it will be up to the passengers to decide, and at the moment the loads are high and the fare structure has been designed very carefully (as with the other low cost carriers). Time wil tell, but it would be a shame if we as pilots knock the aircraft just because we prefer to fly a jet.