Some budget carriers have a better record than others when it comes to delays. It's part of the price you pay. Some carriers use older airplanes which break down more often... No matter what the reason, the same European rules apply whether you're waiting for full-price or cheap flights. As an example, a Monarch flight was delayed for more than seven hours in July, 2012. The reason was that the plane due to make the pick-up broke down and it took a longer than expected time to get the replacement part. The flight eventually left at 3 am. Monarch refunded the cost of the ticket and provided food vouchers during the wait. It refused accommodation on the ground that it was more disruptive to passengers to have the chance to sleep until 1 am before being rousted out and sent back to the airport in time to board the plane. Whether this is an appropriate view is irrelevant. The principle of a price refund and food is clearly correctly applied.
Note this was not an example of cancellation. The plane was eventually repaired and took off, albeit later than scheduled. On November 19, 2009, Sturgeon v Condor Flugdienst GmbH and Bock and Others v Air France SA in the European Court made a very significant ruling. Angry claimants were arguing that, after a point, delay becomes the same as a cancellation. The only issue was how long. In the end, the court said three hours delay due to the fault of the carrier should be treated as a cancellation with all the rights of compensation that flow from that. However, the right of compensation is not absolute and the airline avoids payment if it can prove that there was an "extraordinary circumstance", e.g. a volcano spewing out ash and, no matter what the airline had done, the delay was unavoidable. In the case of Monarch, the English courts have been asked whether the delay was avoidable. This seems likely. It was an old plane that broke down through lack of maintenance and no replacement part was available in the airport.