Well, the BTC can be split up into 8 decimal places at now (mBTC, Satoshi)... so when the demand for bitcoins is high enough, the "dominant" btc unit will become mBTC. Problem solved.
The problem is that the 1BTC I have in my wallet increases in value over time without me doing anything to compensate for that. An ever-increasing (but correctly increasing) amount of BTC ensures that the buying power of my one BTC remains the same.
For example, today I can get 1BTC for ~$100. Say I held onto that 1BTC for a very long time and eventually bitcoins became the earth-standard currency. That 1BTC would now be worth significantly more than $100 (say, now I would be able to buy a house with it).
You might argue that this is how banks work (interest etc.), however banks earn you interest by lending your money out to other people who contribute to the GDP on your behalf.
Don't get me wrong, I think something like BTC is a great idea - our human nature just makes it impractical (not impossible). Things like money-hoarders and deflation need to be addressed, which at the moment are not.
Referencing this post and your first:
The fact that bitcoins can be divided until 10^-8 is mainly the feature where the idea was relying. Your state of the power plant compare was right, but as bitcoins get divided the number of transaction will rise causing the blocks to get higher. sure they will settle at a current level, but this will provide the stability in its value.
the problem of the value is already present at the moment. Taking that simple example of the 10000BTC pizza, the Pizza service, if they still hold that amount, are now millionaires. but thats the point with every currency. but they use reforms to handle the problem, which requires an authority to control it, which will not be possible with btc.
Much of the value present now will be lost in not too near time. Wallets get stolen (and the thieves don't dare use them, because BTC is not as anonymous as most people think), wallets get lost (mindwallet password forgotten, disk crashes and no backups), people just forget about their Bitcoins like many of the early "adopters" did whose bitcoins are now rotting... so this will be a good adjustment for Bitcoin value, when the "divide" happens or earlier.
For example, today I can get 1BTC for ~$100. Say I held onto that 1BTC for a very long time and eventually bitcoins became the earth-standard currency. That 1BTC would now be worth significantly more than $100 (say, now I would be able to buy a house with it).
You might argue that this is how banks work (interest etc.), however banks earn you interest by lending your money out to other people who contribute to the GDP on your behalf.
It all comes down to buying power. http://en.wikipedia.org/wiki/Purchasing_power
Don't get me wrong, I think something like BTC is a great idea - our human nature just makes it impractical (not impossible). Things like money-hoarders and deflation need to be addressed, which at the moment are not.