Increasing the block size would evidently decrease fees since there will be less competition between the senders of funds for the inclusion of their transactions in the newly found block, which consists in increasing the fee size (the higher the fee, the faster the TX will be included in one of the new blocks). Miners surely won't like that...
Thereby, the block size is not to be expected to get increased any time soon
You're talking about peanuts.
With increased capacity comes increase in usage and types of usage making the system more valuable.
Do you really believe that increased capacity can somehow lead to an increase in usage? If it were so (simple logic), why had it not been done already (I mean the block size increase) given that miners are interested in "making the system more valuable" as no one else out there? This is not a rocket science or quantum mechanics to get a clue at what's going on...
In short, you are putting the cart before the horse
If there is no increased capacity, there will be fewer people using the bitcoin. For example, the Ethereum is very fast, so there are more people using it.