Wouldn't the same logic apply with the seller and their vendor? At the end of the chain, someone ends up holding the Bitcoin, and they have an incentive to pay a little extra, assuming a reliable and consistent level of deflation.

In a sense, this already happens in dollars, in the form of opportunity costs for relatively stable investments like mutual funds. Assuming zero transaction costs, what's the difference between spending Bitcoin that would otherwise appreciate 5% value per year, vs. spending dollars, thereby foregoing the opportunity to invest in a 5%/year mutual fund?

(Obviously, I'm assuming an ecosystem of both fiat and crypto; it might be a different story if we were debating a deflationary-crypto-only marketplace.)

Also: it's worth noting that the steady influx of new coins, deflationary and otherwise, means that if one looks at the entire crypto ecosystem rather than just Bitcoin, the deflationary problem may end up being practically non-existent. For better or worse, the whole thing is effectively a live experiment in the Free Banking model: creating markets for currency itself.