Edward Castranova asks, at Terra Nova (with a follow up from Nick Yee), if inflation is fun. Specifically, within the frame of the MMORPG. He also closes by mentioning that getting rid of inflation in games worlds would be "eminently doable".
OK, imaginary world economics are not going to be popular stuff, so I'll keep it short. To counter the second point, while getting rid of MUDflation may well be rather easy, doing so without creating deflation through liquidity issues would be a lot harder. You can't just take a world like Star Wars Galaxies and put a simple cap on the narrow-measure money (cash) being created through game functions like missions. People are creating wealth all the time: taking less valuable commodities like resources (and time... oh so much time) and crafting lightsabers. You would have to match money supply to the rate of increase of real wealth, or else the very best you can get is Japanese economy. The fact that players always want to keep a certain, very substantial, amount "in the bank" is a key deflationary pressure here, too.
Castranova, of all people, clearly knows this very, very well, thus the question (even if terrifyingly few of those posting in the responses are aware of it). And the answer, as he aludes to, is "yes, a dose of inflation is fun in a MUD". Players want to see that they are much richer this month than last. If everyone is always to be substantially ahead in cash terms, that means cash is going to have to be worth less. Players may grumble about rising prices, but if that can be solved by a couple of hours at the mission terminal then they will care an awful lot less than if liquidity is the problem.