That's not really true; perhaps if the price had been oscillating wildly I'd agree with you - what we've had is sustained upward movement with the occasional flash crash. Merchants for one are quite happy to accept payments in Bitcoins while the price is going up (part of the reason I think bitcoinstore has been selling at a discount).
Customers might be wary about spending Bitcoins if they think the price is skyrocketing, but in practice that doesn't really seem to be the case. Especially since many of these people bought or mined their Bitcoins when the price was so low - I've had more orders since the price started going up than in the previous 7 months.
That the price is going up so steeply is ultimately a good thing for Bitcoin - by comparison with gold and silver, the higher Bitcoin's market cap is, the more stable the price should be. Silver is much more volatile than gold, because the market is so much smaller - both are highly stable by comparison with Bitcoin.