One key aspect worth noting is that, up until the advent of virtual currencies, one large edge of inflationary over deflationary policies is the fundamental limit to how small your currency can be functionally made for transfer.
The indefinite divisibility of bitcoin completely bypasses this incentivizing increasing monetary velocity as a result.
Bitcoin is not and never will be infinitely* divisible. Amount 0.00000001 BTC is currently the smallest unit. Value is currently expressed by 8byte (64bit) number of this units. This means there is space for 18 446 744 073 709 551 616 units. Considering maximum 21M coins, smallest unit would be ~1.14E-12 BTC. Effectively this means space for adding additional 3 decimal places up to 1E-11 BTC without change of data field.
We can estimate gross domestic product of planet Earth to be less than 1E14 USD (about 0.83E14 in 2012). If all the world economy was converted to bitcoins then 1 Satoshi would be worth 4.762 cents in current USD. This is too much for micropayments. Above mentioned "smallest unit" would be worth thousand times less. I consider this to be adequate (for the planetary phase of human evolution) :-].
* - not infinitely divisible.
But division up to the number of atoms in the observed universe would be no problem. Still long shot to infinity.
And to correctly write down this number would require even more atoms (let alone making a transaction or handling it in some way, lol)...