Jimworcs,
For years regulation 261/04 lent itself to the interpretation you have put on it that delayed passengers were entitled to food and drink only, and for delays over 5 hours they got accommodation, and that passengers on cancelled flights were better off when it came to compensation.
However the ECJ judgment in
Sturgeon v Condor and
Bock v Air France
http://www.lawreports.co.uk/WLRD/200..._v_Condor.html
given on 19th November 2009 held that delayed passengers whose flights arrived 3 or more hours after the scheduled time were entitled to cash compensation provided in Article 7 of Regulstion 261/04 which in the case of a flight from Frankfurt to New York would be 600 euros per person.