I think several folks have good points and they are all right.
1) Real wages are going up over time. If you have a CPI-flat withdrawal, your consumption over time will decrease *relative* to your neighbors.
2) CPI overstates inflation. This is primarily because greater choice and product improvement are not (and probably should not be) weighted much in the index. The net effect is that a person making the same CPI-adjusted wage over time is much better off in later years. See links below for explanation.
3) Some improvements you cannot choose to go without, or probably don't want to. Even though cars have gotten cheaper and better and continue to do so, soon you won't be able to purchase a car w/o anti-lock brakes, side air bags, etc. You can't buy medical insurance that says you are only covered for 1992 level medical care. And some improvements you won't want to go without. Who doesn't want internet access? Who wants to go back to black and white TV. These are great bargains even though it takes something from your budget, etc. I think cell phones are a wonderful convenience and they are dirt cheap.
4) Medical inflation is a wild card and caveat to #2. The CPI index does NOT account for increased medical consumption due to medical advances (you can read this in the fine print at BLS). So if you are a retiree paying for health insurance, especially if not in a group risk pool, then #2 may apply differently to you.
Overall, I think you are OK having a CPI-flat withdrawal over many years. But you will probably want to grow the draw by something like 0.5% per year, on average (after 20 years this is a little over 10% more, for instance), to account for extra things that will be available that are a great bargain, as well as things that you can't opt out of. Aging and reduced desire for certain activities may partially counteract this desire for more money. Basically, life gets better with or without the extra adjustment (and I think this is from where the divergence of opinion stems)
BTW, I think that study on less spending when you are older was fundamentally flawed. Although I do think spending decreases slowly as we get older (until the very end spike).
Kramer
The following are informative and readable blog entries:
1975 Sears catalog test (vs. now):
http://cafehayek.typepad.com/hayek/2006/01/a_1975_sears_ca.html
# hours to work for sears goods:
http://cafehayek.typepad.com/hayek/2006/01/working_for_sea.html
Primer on standard vs. cost of living:
http://cafehayek.typepad.com/hayek/2006/09/a_primer_of_sta.html
CPI Bias:
http://cafehayek.typepad.com/hayek/2006/10/cpi_bias_ii.html