Allan Bevere has some good thoughts today on the topic.
Grade Inflation: Its Causes and Consequences
I heartily echo this paragraph by Allan:
Part of the problem is that we live in a culture where relationships are understood primarily as transactional and education is often understood by students as exactly that. In exchange for tuition the school issues good grades and a diploma, assuming of course that all the assignments are turned in and class expectations fulfilled. On more than a few occasions I have had emails from students after not receiving an A for the course wondering why they received a B (or less) since they did turn in all the assignments. Apparently, the quality of the work for some is not the determining factor in the final grade; simply turning in the assignments is sufficient.