comparing European and American (particularly West Coast) public transportation systems is really apples and oranges. Most major European and east coast/upper midwest American cities developed around fixed systems (subways, els, commuter rail) while very few West Coast cities did. The major reason is that the wild, wild West is predominantly a car culture; now that the cities are developed, it is very difficult to retrofit a fixed guideway system. Unfortunately, Seattle area voters turned down chances to build a rail system in the late 60's and early 70's; otherwise, we would be in the fourth or fifth phase of construction rather than early in the second.
As far as the jitneys and smaller vehicles in European cities, Metro is not a city system -- it is a county system serving a much vaster area and running much longer routes (2,100 sq miles with a population of nearly 2 million.) Circulator routes have been tried numerous times and in different configurations and they generally do not attract enough riders in the urban areas; they do work well in the suburbs, which have several DART routes. Private bus operators have pretty much chosen to stick to charter service in this area.
Metro does buy 25' vans as well as 25' and 30' medium duty buses; these are used primarily in low ridership areas or locations with narrower streets. Metro buys for peak needs; if they bought a lot more 40' buses, you would be passed by a lot more often. Again, the cost of running 60' buses is marginally more expensive than using 40' buses.
Jiggers, I don't know what route you ride but most WS routes have newer buses running on them (I'm guessing the 21 as it is still running older buses.) Metro is actually receiving new buses right now; the older high-floor artics and 40' diesels will be phased out (they will likely be sold to a smaller transit agency in the US or to Mexico or farther south.) Metro's average fleet age (9.3 yrs) is younger than most transit agencies; even though the buses are rotated to even out mileage, they are still heavily used before they retire (the fleet traveled 50.3 million miles in 2010.) Since federal $$ are used on all public bus purchases, federal rules govern fleet age and other characteristics.