Merchants need to be selling for btc BELOW their cash/credit prices, otherwise it just doesn't make sense.
I do this.
I give a 10% discount for those who pay for my services (custom MS Excel tools, utilities, forms, VBA-stuffs, etc.) w/ Bitcoin.
Unfortunately, none of them have heard of Bitcoin.
-Jix
Services are much different than tangible products, and tangible products are where the real market is.