I don't like topics about block size. It's smarter to talk about free space within each block. On an average computer, most people would say you need to keep at least 15% free space on your hard disk so that you work on files without hiccup. It's the same thing with BTC. If we're close to max capacity, things will be less smooth. It may even stall at some point and we don't want to see that.
If we perpetually increase capacity ahead of demand, fees will never rise. Transactions will always be free or nearly free for users. This will not end well in a future where block subsidy ends and fees alone must support the security of the network (by incentivizing miners). If we did this, we are basically depending on mass adoption and skyrocketing price being guaranteed. That's probably not a good engineering decision.
Exactly. People need to become aware that by transmitting a transaction they make use of resource - the Bitcoin network secured by miners. Such a resource can't be provided for free, because the miners are doing work for it. Since Bitcoin's maximum supply is fixed (for good reason), miners can't be eternally paid from block discovery rewards. Fee will play an increasingly important role as mining rewards in future.
Some fee pressure is also needed to prevent transaction spam which could easily render Bitcoin unusable, if no block limits are given and the network is flooded with micro-transactions. Ironically several such spam attacks were carried out by the big-block fanatics to proof that blocks were "full". In fact these attacks only showed that fees weren't high enough...
The reckless Gavinista bigblock-advocates even went as far as painting shiny charts that predicted a breakdown of the Bitcoin network around the end of last year. Nothing happend. You can always transact smoothly on the network, if you are willing to pay the appropriate fees.
Bitcoin capacity increases will come with segwit and small increases in block size to preserve decentralization. That's the responsible way to do it. There's no urgency to rush a toxic solution that endangers the original source of Bitcoin's value.
ya.ya.yo!