Should we worry about deflation? I think it's worth concern. Indeed, the one time I ever met George W. Bush, at a small meeting of people to talk about "new economy" issues, I told him that deflation was a possibility.
But a lot of the recent babble about "deflation," especially that coming from Wall Street types, isn't about deflation at all. It's about tough price competition in some industries. I take up the issue in my latest NYT column. There are many complicated and contentious aspects to macro policy, but I tried to stick to the issues where the division is between ignorance and knowledge, not, say, monetarists and neo-Keynesians.
For more on fighting deflation, Ben Bernanke's November speech is well worth reading.