It's certainly no panacea. Greece has been living beyond it's means and a certain reduction in living standards is going to have to happen. What a bout of inflation allows is resetting everyone's salaries, pensions, etc to a lower level without inducing extra unemployment which requires an even larger correction.

There is always the danger that Greece will say "to Hell with it," print money to fund their expenditures, and get hyperinflation. But that's a level of mismanagement even worse than Greece has shown in the past.