You may have heard me say "Bitcoin is an experiment" before... well, we're finding out right now what happens as the experiment scales up.
First: I sent a message to the big mining pools, reminding them of the run-time options they can set to control the size of the blocks they create. I did not tell them what they should or shouldn't do, I think we need to move beyond centralized decision-making.
I did send them a pointer to this very rough back-of-the-envelope estimate on the current marginal cost of transactions:
https://gist.github.com/gavinandresen/5044482
(if anybody wants to do a better analysis, I'd love to read it).
Second: block size is half of the equation. The other half is transaction fees and competition for getting included into blocks. All of the bitcoin clients need to do a better job of figuring out the 'right' transaction fee, and services that generate transactions will have to adjust the fees they pay (and are, already).
Finally: in my opinion, there is rough consensus that the 1MB block size limit WILL be raised. It is just a question of when and how much / how quickly.