Money isn't something magic, it is just a theoretical construct for facilitating trade. So money is working properly when it does that well, and is not working properly when it doesn't. Deflation works against a currency, it makes it not work well as money. When things continually deflate, it makes people hoard money which is bad. Remember when people aren't spending money what is really happening is that trade isn't going on. Money is only useful if it gets spent. If everyone has a big pile of anything that they just sit on, it isn't actually money.
You need to get past the idea that money is something special or magical, it is just our way of facilitating trade.
Also deflation is something that rather fucks over the poor in favour of the rich. Deflation means that wealth gains over time, so if you have money, you get more simply by doing nothing. It makes loans of any sort of term rather impossible. I mean can you imagine taking out a 30 year mortgage, knowing that every year that payment would get harder and harder to afford? For that matter people can become very unwilling to lend money at all, since they can get a guaranteed return just by holding it.
If you think deflation is good because it makes the amount in your piggy bank worth more, well you need to go and take ECON 200. You need to learn a bit more about how money actually works in the world. Most important, you need to understand that money itself isn't anything, it is ephemeral, it can be represented using metal, salt, rocks, teeth, paper, bits (and has been all those things), it is just a theory we use to allow for an infinite level of indirection in time and space with a trade. The real economy is people doing things, making things, fixing things, inventing things. Money is just our way of working out who gets what.