There are several circumstances in which regulation or banning could come into play, each of which has certain drawbacks from the standpoint both of consumers of Bitcoin and regulators. There are certain ventures within the Bitcoin community which involve cooperation with mainstream banking entities, something that effectively "regularizes" the currency. This, which allows both easy entry and high volume transactions, also is the easiest to regulate, since banks are forced to be compliant with a great number of regulations. In this sense, the more normalized and regularized certain aspects of the Bitcoin economy become, the more vulnerable it is to regulation.
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The other tactic is to target Bitcoin partners, all of which by necessity have some sort of address (both literal and virtual). For example, large Bitcoin users like Silk Road could be aggressively targeted by law enforcement via raids and and confiscation of servers, etc. A second tier could be Bitcoin exchanges, suspected on account of being vehicles for money laundering (these charges are what led to the demise of previous digital currency companies DigiCash and E-Gold). 
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Actually banning Bitcoin is also a possibility. As noted by some Bitcoin experts, it is also possible that a nation-state could dedicate enough computing power to "break" Bitcoin. It could presumably ban Bitcoin as well, but again many things currently traded within the Bitcoin community (i.e. drugs) are also banned -- the more tricky thing is to determine what governments can actually enforce.