The current short fiction market is ruled by character-driven prose. Almost every literary magazine site I look at states that they are looking for character-driven fiction. That realization has changed my writing a good bit.
Before I had always written with a combination of style and plot as the most valued attributes. Now my characters tend to be better developed and more active in the story. The real slap-in-the-face moment for me was my first (and only at this point) personal rejection on paper. I have it somewhere, but I'll just paraphrase for you. It went something like "Not a bad scene, but I didn't really care who won because I didn't know any of the combatants." I read over my story and found that my character felt a little distant. He needed to be pulled to the forefront a little more. My POV since then has always been a bit more 3rd-person limited (assuming I'm not in 1st or in a couple instances 2nd-person horror) than 3rd-person narrative as before. The voices of my protagonists are a lot "louder", more like they are in middle-grade and young adult, even when I'm writing for adults.
Is character-driven prose the only way to go? No. I don't consider Robert Jordan's work to be overly character-driven, yet he's pretty much my favorite author despite the fact that I've only read two of his books. Literary fiction with flowery wording is going to woo some people to the end of their days in spite of character and bulky epic fantasy is best kept mystic and plot-driven. That's not to say that character isn't important; character is still at least a quarter of the battle even in the most plot and setting-centered writing.
I've said it before and I'll say it again. Beware of straw men. (That rhymed. No, it wasn't intentional.) Archetypical straw men can only do so much as protagonists outside of paperback thrillers. If your characters are flat everything will feel flat. And that's a serious problem.
Verdict: character-driven prose is the way to go for most people. Exceptions exist, as I've pointed out, but for the most part a heart-warming, sympathetic protagonist will get you miles further than an amazing setting. Although, just to be safe, you should probably have both. And a wicked plot. No pressure.