You've probably just opened a huge can of worms here, my friend.
This is a deep and interesting topic that could span many books, but here is my abridged take, the ideas of which permeate the other comments in the thread.
The core basis beyond Bitcoin's popularity runs deeper, IMHO, than merely that fiat is inflationary and can be created by the press of a button by a certain privileged few, although that is certainly a big part of it. In fact, as I'm sure many people on this board knows, it wasn't always the case that the US dollar was inflationary. In fact, at one point in time, the US dollar was pegged to gold, and it wasn't until quite recently that the dollar became free-floating. See
http://en.wikipedia.org/wiki/Nixon_shock. A free-floating dollar, printable by the Fed, enables all sorts of activities that are favorable to some, and not favorable to others. While it is true that the dollar as it exists today benefits USG and enables it to do all sorts of things it would otherwise be unable to do, it would be incorrect to say that the dollar as it exists today only benefits the government.
An inflationary currency, generally speaking, benefits debtors at the expense of savers. In addition to this, the current structure of USG and its banks allows certain parties to benefit more from the money-printing than others. Those closer to the creation of money can reap the benefits of this new money before its effects are distributed to the wider populace. In the US, these are mainly banks and other entities that have close ties with the Fed and central government.
My view is that Bitcoin is popular because it confers great power to the individual, power that central governments have managed to co-opt for most of history. Indeed, the power of coinage is one of the greatest weapons a government can have, and enables the government to do one main thing that it would otherwise be unable to do - grow. Giving up this power is something governments will not abide. It is not a coincidence that Bitcoin is popular among a certain group of techno-libertarians, and population subset that doesn't conveniently align with the traditional political classifications that we're taught to identify with. Having this as background with give a lot of context to the hostility of governments have for Bitcoin and virtual currencies. While many might view Bitcoin has merely a new virtual currency that make certain payments easier and more cheaply, governments are quite aware of Bitcoin's true implications.
