I'm a modern artist, and my work is highly sought after. To date, I have created 10 pieces of art that had a fairly high and stable value--until a break-in occurred and two of the artworks were destroyed by people who don't like art. Now there are only 8 of my masterpieces in the world and their value went up because there's fewer works of art with my name on them. Granted, I have more art in the pipeline, therefore seeing the value of those remaining 8 pieces of art worth less when my new art enters the marketplace.
In a nutshell, if there's 7 million bitcoins, and 1 million are destroyed, doesn't that increase the value of the other 6 million?
That depends. If there are 7 million of - for example - a particular brand of washing machine and 1 million of them burst into flames, that obviously makes the remaining 6 million rather less valuable. (Also, most of the bitcoins lost so far have been stolen rather than destroyed, so the number in circulation hasn't decreased that much.) On the one hand you have the decrease in supply, and on the other loss in confidence in Bitcoins as a result of the heists.
That's the exact problem... it can be fixed... and given enough time it will be fixed... but honestly these criminals have set back bitcoins by at least 6 months, or longer.