As bitcoins are mined are older bitcoins retired? If not, how is monetary inflation prevented? Wouldn't the additional bitcoins cause the overall value of bitcoins to be deflated?
Bitcoins are created at a predetermined rate. Until this rate drops to 0 (around the year 2140), the supply of bitcoins is increasing. If this isn't offset by destroyed/lost coins and increased demand, some amount of inflation will occur. However, I'd expect the inflation rate to be low (if positive at all), and getting lower.
Once all ~21 million bitcoins are mined, no more will ever exist, so inflation will cease entirely, and only deflation can occur (again, as bitcoins are lost or intentionally destroyed). There are currently ~12.7 million bitcoins in existence, so at most, inflation will make 1 bitcoin today worth ~1.65 bitcoins in the future.
First of all, there's nothing wrong about some inflation or deflation in general. You can hear lots of flame from various economists, some of them trying to persuade you that a small inflation is beneficial or even essential, but this is not necessarily true (one example is IT hardware market).
OK, that was just a note to calm down and think first when somebody is talking about inflation or deflation and keep in mind that there are different views on this, depending on various stuff, including philosophy or religion beliefs.
Second, there is a difference in inflation in nominal amount and a real value. While Bitcoin is unarguably inflational in the sense of total units of currency "minted", it is expected to be deflational in sense of real value. The reason is quite simple: the market growth is expected to be much bigger than the preset currency supply. If that is good or bad, that depends on your point of view :-)