What's problematic is when you buy something worth $50 USD with 5 Bitcoins, and the Bitcoin to USD drops before the seller can get their USD from MtGOX (or whoever their Currency Exchange house is).
The upwards volatility isn't a problem in that buyer/seller scenario. If I want to buy something worth $50 USD, and I go purchase 5 bitcoins for $50USD, and then, those bitcoins are worth $55USD by the time the purchase clears, then I only paid $50USD and the Vendor received $55 USD. Everyone comes out a winner.
If BTC is rapidly rising against the dollar, then I'd rather spend dollars because I'll want to keep the BTC in my account in anticipation of further appreciation.
And, for that matter, the fact that the entire conversation is framed this way doesn't bode well for BTC as a currency. People who use a currency as a currency measure its rises and drops in value by comparing what you can buy with a given amount of the currency in the present versus what you could buy with the same amount of that currency in the past. When people measure something's value in terms of some other currency, as is the universal practice for BTC, that indicates they're thinking of it as a commodity for investment or speculation rather than a currency.
If all you know is a week from now it'll cost somewhere between 50 and 500 bitcoins, that's a lot harder to plan around.