This is a really interesting thread. I've been loyal to VA (over QF) for a number of years now, but haven't flown with VA since early February (due to unforeseen circumstances). If VA is cost cutting in the tangible areas (such as meals / drinks / customer service etc), then they really do need to take a good hard look at themselves and start asking questions as to why they cannot lift their soft product to a level that encourages customers to choose VA over other options.
If you don't have customers, you don't have an airline. Customers expect value for money, and (quite rightly) expect to be valued by the company attempting to secure their business. From reading the comments in this thread, there is a very real threat that many loyal VA customers may suck up losing their status with VA to transfer over to QF. I would sincerely hope that VA take the comments noted in this thread under advisement and take real steps to improve their offering. Otherwise, whatever credibility they're built to date could quickly be washed away.