I think we will find that a major, if not the predominate use of BTC, will be as a store of value. You know, the _other_ function of money. Using BTC for ordinary and "legal" trade has a blizzard of intractable problems with no obvious (to me) benefit. How is BTC better than Paypal if you plan to obey the "law" ?
On the other hand I very much enjoy having a store of value, the safety of which is subject only to my responsibility. Its security is not subject to .gov edict and it will not be taxed, seized, capital controlled, or otherwise molested. Wherever I am in human space, there is my money as well.
Although I think it would be foolish to pour lots of "real" money into BTC right now, over the long haul, millions of people putting a few thousands of dollars (or more) into this would easily generate the influx of fiat required to pump up the price to amazing levels. Once people have put "real" money into this, they're going to be reluctant to liquidate at a loss and this will provide a resistant floor to panic. Notice how well the prices at Tradehill have stabilized, despite the Mt. Gox attack. During a panic, I will merely sit and watch and wait for the storm to pass, instead of running for the exits.
All of the recent Mt Gox/hacker hooplah is merely evolution in action. When the weak are slaughtered the survivors will be much harder to attack. Trial by fire.