I would imagine that an inflationary currency would have the same problems, just in a different spot than a deflationary currency.
Man, I'd better buy stuff with this, so it doesn't lower in value.
Shit... I'm getting paid in something that's only going to get more worthless, why should I accept this crap?
Hmm, do I really need to buy X? If I wait a year, I can afford 1.03 X!
What's that? You're paying me in something that will get more and more valuable? Awsome.
The second seems a lot more conductive, as it encourages people to *gasp* save money. A concept that has been lost on Americans for a long time.