Indeed I agree that a changing price doesn't necessarily mean that the currency is useless as a medium for transporting wealth just that when the exchange rate is volatile it's much more attractive to see BitCoins as a speculative vehicle. That's what drove the bubble last year and could very well be the same thing that's happening now. The growth rates are similar (although starting from a higher base) and that's primarily what I'm worried about.
And don't worry I'm quite familiar with fiat currencies ;)
Yet again I agree with you, the BitCoin economy needs more investment in it in order to counteract the issues that I highlighted. Thankfully that seems to be happening (I believe YC just accepted its first BitCoin based start up) and as time goes on the market should stabilize. I think that's when we'll start to see BitCoin spread outside the high tech sector and I'll gladly count BitCoin among all the other "proper" currencies.