At some point, you'll have to make a payment to someone who doesn't accept Bitcoin, which is the point of failure. While cash may be anonymous and Bitcoin may be anonymous (the second one is dangerous, in and of itself), you will have to make a conversion to real-world currency and that transaction can be as heavily regulated, including the requirement for non-anonymity.

And if you stick to Bitcoin transactions only, it would be very easy for authorities to declare tax-evasion, for starters, which opens up a whole different can of worms, as transactions are occurring in a non-regulated space.

On the whole, it seems like Bitcoin-enthusiasts would be far safer in a more regulated environment.