It is only deflationary in the minds of people who truly believe in Bitcoin.

But for something that can be easily duplicated, and changed around it's kinda stupid to call it "deflationary".

Like I said I think the best solution would be a fast algorithm that adapts to network situations fast (Solidcoin), that has a demuraging rate of all lost/stored coins, giving the money right back to the miners, and putting psychological pressure on people to spend.  Some really intelligent people are already working on this sort of coin http://www.freicoin.org/.

And we should definitely get rid of our sales pitch "deflationary". I think it really does do more harm than good especially when you are talking to an investor who has real hard deflationary assets.