The prisoners dilemma:
If everybody were to sell (or better use) part of their hoard over time the market would become more and more healthy as the fear of dumps depreciates. In terms of the dilemma that would be to cooperate.
Unlike in the prisoner's dilemma, you can very well use Bitcoins (i.e. cooperate in your terms) without reducing your expected reward from future price increases: by simply restocking your BTC regularly.
I happily spend, donate and trade Bitcoins all the time without my savings wallet getting touched. Unless your strategy is to hold even the last bit of your wealth in Bitcoin, there is no prisoner's dilemma here.
Of course you are right. The Prisoners Dilemma is an oversimplification but there is an aspect of it. The problem is there are people who are even hoarding the Bitcoins they buy regularly and spend nothing.
Although I have no idea how many, but by observation on volatility it seems significant. I've read a paper recently which explains periods of high volatility or "hazards" by the strategy of certain investors to hold a certain percentage of total in an asset. This is what causes these spiky movements in-betweeen calm periods. So it's not only hoarding to be blamed but the overal investment strategy which leads to it.... even when every participant in the market acts rationally.
This is highly chaotic and a slight change in fundamentals can lead to drastic results.