A functional economy must favor those that take action more than those, who don't. That is why a mild, predictable inflation is necessary. Deflationary economy favors hoarders instead of producers of goods and services. In time, deflation drives active entities out of market and therefore the bitcoins in their current form cannot become widespread. They would kill every industry segment that would depend on them.
-vlastimil
I'm not so sure that inflation is a good thing either. It might just be the lesser of two evils. (* See Humor Thread for a cheapo joke!)
The way I see inflation, the "middle class" gets jammed because at the personal side "revenue" (aka your wages) is someone's judgement with a game theory low-level tendency to go DOWN. Expenses are Other People's Revenue with a "market gamble" to push UP. So in MicroEconomics, there are a series of ideas around "counter-intuitive demand curves". "As the price of a core Product And/Or Service go up, the proportion of the consumer's money spent on them goes UP." (You'd think it should go down, like most discretionary offerings.) The key word is proportion. The famous examples are car gas and rent. When trying to stay alive gets more expensive, you have no room left to do anything fun. And when any consumer ever asks in frustration why this is, the business managers all whine "prices are always rising." Consumer responds "But you're paying me less." "Yeah, well, gotta keep costs down, blah blah".
(I said "Low Level" game theory up there, because at the more advanced stages, you get things like a town boycott can shut down a store, or the mayor can influence wages, or in a really hard business you get the "quality of worker you pay for", etc. (Outsourcing Customer service, etc.))
So while difficult, maybe an exactly level economy might be best on paper. A true deflationary economy is bad news, because a ton of the economy runs on "momentum" and when you lose the "critical mass" you get a mess like Detroit. However an interesting thing, while a bit tricky at first, is a currency adjustment which is simply math on the currency, but the actual GDP etc of the country is the same.
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(Although India may still end up being who designs it.) 
