Does a deflationary crypto currency have an edge?
Correct me if I'm wrong but, all things being equal, a cryptocurrency with a limited supply will always have an edge over inflationary models.. and benefit from network effect.. If Ethereum had a limited supply or used deflationary model, it might benefit it more in terms of network effect of a higher price from increased use. Gas price is decoupled from ether anyways. tl;dr version: rarity and demand for gold drove its wide use.
You are right. Scarcity of anything brings its price up. Price goes up only if the supply starts decreasing as compared to demand.
I have a different opinion on this. I think, it totally depends on future plan and functionality of coins. Even if there are large number of coins available and coin has large following due to its functionality, then surely it will be a great investment in long run.
Yes, that's a valid point as well. Usage and functionality is important, but scarcity also plays a very important role in bringing the price up.