One problem is that the value of a bitcoin changes so much. So for example a Big Mac costing 3 bitcoins today may cost 1 bitcoin next month, and 0.1 bitcoins in three months. So for practical purposes having a currency directly pegged to the BTC is perhaps only feasible when/if the value of a bitcoin stabilizes.
That's only if you're comparing the currency to USD.
If so, you could say the same thing about the price of a bigmac in AUD, EUR, JPY... and yet in those countries, the price of bigmacs stays the same. Why? Because an aussie in australia using AUD to purchase bigmacs, doesn't care about the USD exchange rate.
Same would be for BTC if the price were set in BTC and it was the official currency of a whole country.
But the bitcoins would still be related to other currencies, such as the USD, in the rest of the world even if Island used only bitcoins themselves. And McDonald's wants dollars. So Island would need to pay McDonald's and all other companies outside Island in dollars (or euros etc) which means that the price for a Big Mac and most other goods and services would change every day! That would be impractical.