>what about Bitcoins being lost?

At some point, the rate of loss may overtake the rate of new coin creation.

> perhaps we should also consider coins that are not used in the past five years also "lost".

Maybe, but be prepared for some of those to someday be spent, they may merely have been hoarded. I have dollars that have been in my possession for more than five years, they aren't lost as far as I am concerned.

Even if you mark them 'lost', you can't just trivially reassign them. You would need to have the private key to be able to spend them, there is no other way.

This is known as seigniorage: http://en.wikipedia.org/wiki/Seigniorage

Interestingly, though, while (some) seigniorage is a good thing for a debt-based like the dollar, it's a bad thing for Bitcoin.