I cannot see Virgin changing at present given the conditions at play in the market, the Embraer's are helping significantly by offering lower cost operations and providing the frequency customers require. For example I would get an extra hour of business done on a day trip to Adelaide by flying Virgin from Brisbane rather than QF group, the first QF mainline option leaves me with a half day to do work while there is a JQ option that still gets in an hour later than DJ if it is on time.
While the Southwest model works well with 737's in the market it operates in, this is not the case in Australia where freight is far more a revenue contributor, and this is where the A320 flys, with its container capability providing quick turnaround capailities and less ground crew to service that turnaround. This ability results in a 10 minute advantage on average, over a day that could well mean an additional sector capability for the aircraft asset without the increase in human costs, that soon adds up with DJs 370 sectors it flys per day to some serious savings.
The ownership of DJ has changed since they settled on the 737 option, and the influence of Toll cannot be underestimated in future fleet purchases, at this stage too much has been invested in the current fleet to warrant an overnight change that makes sense on a commercial level, medium to long term I believe a slightly bigger mid size jet might be an option but not a widebody, they are great during peak times but are hard to effectively deploy when the demand is not there, Wednesday and Saturdays for instance.