1. Passengers don't like props (or airline management thinks passengers don't like props).
2. Fuel is "cheap" right now, so the operating cost savings isn't that great.
3. The Q400 costs a lot. They go for $25-30 million. A CRJ-700 and an E170 go for $30-40 million.
4. The Q-400 does best on short segment routes (less than 500 miles). On longer routes, the speed advantage of jets makes them a better option.
$10 million less per plane sounds like a clear advantage, but when you consider that the Q400 is only good on shorter flights, the greater amount of route options the CRJ-700 and E170 can do makes them worth the extra money. Regionals of today need to operate on a large economy of scale. Contracts are short term and they need fleets that can cover everything from a 40-minute flight to a 3.5-hour flight. The Q400 may do great on the EWR to BOS route, but in 2 years, that contract might get canceled and that airline would then have to try to shift the Q400 on an EWR to RDU route where a jet would be better suited.
Also, consider that there are still many 50 seat jets that have life left in them. If your airline has a fleet of 50 seat jets already, it would cost you a lot to get a fleet of Q-400s and that would limit you to short segment flights. If you had to spend money on a new fleet, you might as well get a jet that would allow you to fly longer segment flights that make more profit.
It is a cool plane to fly though.