If a lot of people are buying bitcoins then that should push the value of them up (depending on the available supply of bitcoins) regardless of whether they exchange them back in to traditional currency shortly afterwards. It is a form of utility.

All currencies are valued against each other, it is no surprise to see the dollar value used most frequently to determine value, since dollars are the worlds reserve currency.

My opinion is that bitcoin is probably ahead of its time, the technology is amazing, and could be used in many different ways, and I am not yet ready to count bitcoin out just yet.