Who on earth would actually spend any Bitcoins right now? If you'd bought a Pizza with BTC back in 2010, you could have bought a car (or house?) instead only several years later. This type of volatility makes it totally unsuitable as currency.
Regarding stuff being priced in BTC, prices are falling when BTC is rising. Who doesn't like lower and lower prices?
That pizza used to cost 50,000 BTC, it's only 0.0003 BTC today!
Bitcoin is a deflationary currency.
I'm curious how many sellers. When someone quotes a dramatic increase in housing prices in a city, that's not just a single house.
Will it not eventually stabilise? When it's just starting out and only few people believe in its value it seems inevitable it's going to be volatile in the early days. Some people have to start making the first purchases in the beginning so if people weren't buying pizza and whatever with it when Bitcoin was low in value it wouldn't be valued what it is now.
People can put value in whatever they want. I don't think there's a real objective way to say "oh yeah, it's mathematically proven that a diamond ring should cost $10,000...or a $1,000,000 if it's say Marilyn Monroe's ring, and that a single Bitcoin should have a value of no more than $10."