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@pipwish
One commentator on the BBC yesterday was saying that if the political parties can not form a stable government the Queen can make the decision. It would have to be very extreme circumsatnces - such as the whole place going to economic ruin (which it is anyway but not as bad as Greece).
The Queen does have these powers. She approves the new PM each time and in theory could say something different. However, the House of Commons has the power to vote and abolish the Monarchy if it wanted. It's one of many arrangements that keeps the UK a very stable place. The constitution isn't written down but is formed from a patchwork of overlapping laws and precedents.
Does the government tread carefully with the Queen because she has the army on her side? When you join the army you pledge allegiance to the Queen and the country - not the politicians.