Bitcoin's deflationary nature is a natural corrective to Fiat's inflationary one. What we are going to see with BTC is a grand experiment between two competing economic philosophies. I am a happy supporter of Bitcoin. Regarding inflation vs deflation, I have lived through a hyper-inflation in the former Soviet Union and find current events eerily similar. If asked to choose between inflation vs deflation, I would choose deflation...though not on the scale of the original Great Depression. Deflation is actually better for society because it encourages thrift and strengthens the ties of a culture. Inflation has its place, and certainly is popular among governments, but cultures which value money and use it carefully always seem to do better then those who throw it away.
For a simplified but entertaining view between the two competing economic schools, I recommend the following two Youtube videos.
http://www.youtube.com/watch?v=d0nERTFo-SkKeynes VS Hay
aek Round 1
http://www.youtube.com/watch?v=GTQnarzmTOcKeynes Vs Hay
aek Round 2
Skysurfer808
Deflation is a good thing. If everything is paid in BTC, then everything will be 20% cheaper than today in a year. If you can buy things in other currencies, then you can use bitcoins as gold: a store of value, and correlate prices with the most used currency.
The videos are cool, but deflation isn't a good thing. Come on, if we could choose, it's a no brainer: we would choose stable prices. The question is that printing to counter deflation is very often worse than the deflation itself.
Is deflation a good thing for everybody?
Should central banks be burning bills instead of printing them and we would be happier because everything is cheaper?
It's just like saying that printing is good because there's more money for everybody: nonsense.