3) I know the number is really 21million*10^8 or whatever. But that is still fixed and the size of the bitcoin economy (hopefully) isn't fixed. The idea is that it will grow right? So that means that the value of bitcoins will have to change over time which isn't ideal. A currency that has 0 inflation/deflation is the most ideal right?
I think we need to be clear to separate inflation/deflation from supply/demand.
So that means that the value of bitcoins will have to change over time which isn't ideal.
What is the value of bitcoin? It has value only in that people perceive that it has value (the same as any fiat currency). Perceptions change all the time. If you want to see how this plays out look at the currency exchange market today. The value of bitcoin will float over time as supply and demand for it ebbs and flows. The important point is that the supply is fixed (once most of the coins are in circulation) and this serves to protect the value of bitcoin. Inflation erodes the value of currency and punishes savers; its a type of tax.
Perhaps this thread would be more appropriate in the economics forum.