Why aren’t diesel piston engines used on aircraft like the Saab 340 or L-410?
There are many reasons but Ill address your points directly first 


  Engine itself is significantly cheaper


This is only true for non aviation engines. Even if you were to obtain a type certification for an automotive engine the cost of that would reflect a huge increase in price. This has been tried before and proved so costly the engine maker ended up dropping the FAA type cert due to costs. 


  Cheaper to maintain


Again this is only true for auto or industrial application engines. Any part carrying approval down to the spark plugs has a large price mark up over their non aviation counterpart (even if the parts are more or less identical). On the whole piston engines tend to also have a shorter TBO than turboshaft engines.    


  Likely they are heavier and more bulkier than turbine of similar power
  output


This is perhaps one of the most important cons. In aviation weight is the name of the game. Airlines make money not only on passengers but the carriage of freight in empty baggage space cutting into that cuts into profits.



Piston engines once did rule the skies in that size class, the venerable DC-3 is about as big as what you mention and has long since been phased out of routine use. 

For the altitude space in the FL200-FL250 range you also need pressurization which is much harder to drive from a piston engine. A turbine allows you to pull bleed air for pressurization while a piston engine requires a whole separate unit driven by the engine somehow. This adds complexity and again, weight. Over the years there have been some pressurized piston planes but they have fallen out of popularity and use.