The problem is that the heavily restricted money supply and inherent deflationary pressure built into the currency make it a poor medium of exchange, since they provide an incentive to hoard Bitcoin rather than spend it.
Something that is scarce, restricted in future supply, and of high demand will tend to serve as a magnet for speculation.
Assuming you have dollars that you spend on things, the easy solution it to keep hoarding your bitcoin stash, but also convert dollars to bitcoins just before spending them.
Given easy convertibility, bitcoin's deflationary effect is spread over the whole economy, not just bitcoin. So far, bitcoin's not big enough for that to be noticeable.
Something that is scarce, restricted in future supply, and of high demand will tend to serve as a magnet for speculation.