I think that a digital currency will most likely be used first for digital goods (e.g. software, mp3's, movie rental, etc.). When usage increase, people will begin to use it to buy/sell non-digital goods (e.g. books, computers, houses, etc.).
When one trades Bitcoins for dollars it actually stays digital, at this moment. New Liberty Standard trades with PayPal (digital dollars). The service BTC 2 PSC is another way to get digital currency (digital euro's).
I believe that it is too risky to trade anything non-digital with Bitcoins, because there's still a lack of trust in this new currency. When a currency is not backed by trust, it has no value.