I've no reason to suggest that you shouldn't book with Direct Line as long as you understand how they operate.
Direct Line is a travel AGENT, not a tour operator. If you book a package deal with a tour operator (e.g.Thomson or Thomas Cook) and your holiday is cancelled you will get all of your money back. (That will either be from the tour operator or, if they've gone bust, through the ATOL scheme).
However Direct Line (acting as your agent) books each component of your holiday separately. So they might book you on an outbound flight with Airline A, then book you into Hotel B and arrange your return flight with Airline C.
Let's suppose that Airline A, goes bust, so you can't get to your holiday destination. The ATOL scheme will refund the money you paid for your outbound flight but your bookings with Hotel B and Airline C (who are both trading normally) will remain in place, so you won't get your money back from them. (It would be up to you to see if you could find another way to get to your destination, so that you could take up your bookings. If you couldn't, the money that you paid for them would be lost).
Also, because Direct Line book each component of your holiday separately, you need to check that they've included everything that would be in a normal package deal. It's quite likely that they might not include TRANSFERS. (A 'cheap' holiday becomes far less so if you have to pay €100 each way for a taxi between the airport and your hotel).
Chris