What would this solve? When will we do once we reach 8MB limit? what wil we do once we reach 20MB limit? are we just buying time with this?

It is just buying time. Increasing the blocksize now is a solution that will buy enough time for people to come up with a better solution for this issue when it actually becomes a problem.

You are missing one of Gavins most important points. I will automatically increase by almost 50% each year, to follow bandwidth.

"Scaling up a little less than Nielsen's Law of Internet Bandwidth predicts for the next 20 years? (I think predictability is REALLY important)."

I see that it will scale up every year by 50%. However, I don't think this is the final solution to the problem. I think that doing this is a solution that works, but it is not the best or final solution. So, while this solution is implemented, other people will work on new ways to solve the problem.

Yes, you are right. It is not the final solution. There needs to be, and will be, many solutions to this. This one is about increasing the max block size in a way that no one can reasonably complain about. There will also be many off blockchain solutions to this. But we should not discuss one solution against the other, they are all needed.