Which government? Do you think it would all be over if only ONE government started regulating it?
No, of course not. But let's say the US government approves some law regarding virtual currencies that makes it really complicated for merchants in the US to accept bitcoins. The law could also be applied to US exchanges (they could forbid trading USD for bitcoins or demand higher fees).
Now tell me, in this scenario, how much is a bitcoin worth a year from now?
Not sure, but it'd probably be valued in EUR or YEN.