I don't see the advantages of Bitcoin in its current form for consumers of hard goods (that aren't illicit). What are they?
I'm trying to do my part: offering gold & silver bullion in trade for bitcoin. Honestly, I think this goes along way to closing the loop. Gold and silver are arguably the hardest currency/good around. When you can get gold and bullion for bitcoin everything else will fall in line (of course I can't supply all the gold and silver by myself).
Food and Gas are what need to be offered next. One can start by offering something like Safeway pre-paid cards - which do not cost anything (no $5 fee like the visa gift cards) and are good for gas and food at all of their different chain stores. These cards can be purchased up to $500. When merchants see that bitcoin is as "good as gold" - and that they can buy the necessities of life with it - the rest will follow. As others have said, the "ease of use" problem is the next great hurdle. I believe we are not far off.