Airlines want larger aircraft. You can pack more people on an A319 versus an A318. Thus, even though the A319 may cost more than the A318, the $ it will return to the airline will ultimately be higher. The more people and profits you can put on a flight, the expenses get reduced, which is especially critical in the past years when fuel costs soared.
On the other hand, these larger aircraft are better sellers because it allows airlines to stay competitive by keeping tickets lower. More seats=more fares=can charge less to minimally cover the costs of the flight.
Thus, Frontier ditched their A318s, other airlines are opting for the A321 versus A320, etc.
Not really. More seats does not automatically mean less fuel consumption. It should be more seats=fuel expenses are covered to a certain extent.