Correct me if I'm wrong, but it seems to me that at some point Bitcoin will stop its deflation. Once Bitcoin has mainstream success, if that ever happens, the value of a Bitcoin will stop growing and people will start spending Bitcoin. At some point, the value of a Bitcoin lost through hoarding will equal the value gained by new adapters.
In the eventual steady state (assuming Bitcoin becomes popular and the number of coins created through mining becomes small compared to the number of existing coins), Bitcoin should constantly experience deflation as the world population continues to grow and per-capita productivity continues to increase.
By design, the rate of coin creation must asymptotically approach zero as the supply approaches 21 million. And every lost wallet of addresses (failed backup-restore, Scrooge McDuck died without writing down his password, whatever) will take coins out of circulation, causing some additional deflation.
