In short, Bitcoin price is far from stable. And if Bitcoin is deflationary, everybody will hoard it and nobody will use it as a currency.
Everybody just holding bitcoin is quite an assumption. Alot of people are using bitcoin as payments already. One of which is through Bitpay, which is being used on eCommerce stores today. Everyday stores are slowly and surely accepting bitcoin and other cryptocurrencies as payments. But yes, bitcoin has alot of investors that just simply holds them and doing nothing.
If it is inflationary, what difference it is from any other fiat currencies?
If ever bitcoin becomes inflationary, you still can't compare bitcoin to fiat, since bitcoin being not inflationary is only one of many of the advantages of bitcoin. You're forgetting some other important factors of bitcoin: being decentralized, somewhat anonymous(to an extent), secure due to encryption, etc. Does fiat have those characteristics? Nope.
Will Bitcoin Maketh a Good Currency? It's currently very debatable. Since some people look at bitcoin only as store value and not as a transaction currency. One thing is for sure, only time will tell.