Bitcoins have certain advantages (and disadvantages) that emerge based on the design characteristics of the Bitcoin system. They are hard to forge, they are hard to steal (at least if you plan on spending them), and they are easy to transfer (among other things).
These are valuable characteristics. These characteristics (among others) differentiate bitcoins from traditional currency and make them very well suited for certain types of transactions. They also have characteristics that make them less than ideal for other types of transactions...transactions that the parties don't want logged, for example.
The currencies we have right now, (more or less accidents of history rather than based on designs with defined goals) government backed notes and precious commodities, have their own advantages and disadvantages, too.
Now that we have a counterpoint, I have a feeling we will see more currencies designed around different principles and goals. MintChip, the Canadian government backed cryptocurrency, will be interesting to watch since it will be a blend of traditional currencies and cryptocurrencies. What niche will it fill in the market? It is all very exciting.