Tobold argues that this inflation is, in effect, not real. His thesis is that time is the real currency of MMOs, not gold or ISK or whatever. And with respect to time, most in-game economies undergo deflation, not inflation. While it may cost me twice as much gold to buy a stack of Netherweave now as compared to when the Burning Crusade launched, I make gold five times as fast, so in fact it takes me less than half as long to get the Netherweave as it used to. Low-level characters are better off as well, because there is now more of a market for what they have to sell, so they'll have more gold to put towards items and training.
This makes sense given some trends that are easily observable in Kingdom of Loathing. I used to play a lot of KoL before I got into WoW; it's a free web-based MMOG. In KoL the currency is called meat, but more interestingly, your time is quantized. Players have a limited number of "adventures" per day, and fighting an enemy, creating certain items, and a few other things costs one adventure. Each night at "rollover" (system maintenance time) players are awarded 40 more adventures, up to a cap of 200. It is also possible to acquire additional adventures by consuming food or alcohol, but there's a limit to that as well -- if you get too full, you can't eat anymore until the next day, and if you get too drunk, you simply can't adventure until you sober up.
Like most MMOs, KoL has a facility for letting players sell items to each other. In this case, players can own stores in the "mall", in which they can price their items however they want. And invariably, the items that are priced the highest are either ones that are extremely rare, or ones that are the best at helping you get more adventures. The best drinks and the best food sell well. This is another manifestation of time being the true currency of MMOs: if you can buy more time, you're willing to pay almost any price for it. The most expensive item I've ever come across in KoL is the sober pill. It's been removed from the game as a tradable item, but what it used to do is remove all your drunkenness, so you could start drinking again and thereby get more adventures.
To come back to the point, what we really value in MMOs is our time, and rightly so. It's the thing we can't get more of (KoL excepted). So with that in mind, apparent inflation is often merely apparent.