Needs to be increased is tricky. The natural and necessary state for blocks is nearly full; defining need is hard. "Near-universally agreed to be good to increase" would be better, but people are sensibly worried that it would be held back by unreasonable people and so they are unwilling to take that risk.
The essence of Bitcoin's current problem can be found in this post. The problem isn't the words that I emphasized. It's that a core developer made such a statement.
It is absurd that any real-time system "needs" to run near saturation. This is so elementary it is hard to believe that a competent system designer would make such a statement. It is no wonder that some people are questioning motivation rather than technical judgment.
Posts like this make me grind my teeth so hard I think I should start holding a leather strap in my mouth before getting on the internet. Maybe a pillow to scream into would be therapeutic.
Everybody seems to be talking past each other right now, and not getting a good grip on what the actual problems are concerning block size increases.
Here is another analogy, that will probably be useless;
( snipped good box analogy)
I guess the primary problem with this debate is the unknown of whether the fees will be capable of supporting the mining required for network security. And its not necessarily a yes / no, its a matter of degree. If the box is huge, and its "all aboard" for a penny, does it add up? And if the box is tiny, and its "all aboard" for a kajillion dollars, does anyone use the box? There might be economic modeling that could be done, but we won't really know what will happen until there's an adjustment in block reward. Luckily, there's a built in experiment coming up with the block halving. Theoretically, reduced reward should cause the price of bitcoin to increase, because miners need to recoup the same amount of fiat expended to acquire a smaller amount of bitcoin. Theoretically, reduced block reward should cause miners (who are we kidding, i mean pool operators) to increase the minimum fee requirement to get into a block.
Furthermore, its unknown what the ultimate function of bitcoin will be. If its an everyday money / payment system, large blocks with many tiny fees make sense. If its a high tier master ledger remittance value-storage network, small blocks with few large fees make sense.
So, to me, these are the unknowns that make the debate almost moot.
1. Will fees support the network.
2. What is bitcoin.
edited to add: because the inherent value is the decentralized, no-one-controls-this aspect (except, of course, the pool ops), I believe its a high tier master ledger remittance value storage network, so I guess I fall in the 1 MB block 4evah camp.