We live in a county with the grade 'deflation' too, but I guess it doesn't bother me (yet). Of course college seems pretty far away at this point.
This was one of the 'uh oh' moments for all the parents at the 3rd grade back to school night as the teachers were presenting the grading scale...I think ours is 93+ is an A. Maybe it's a 94; can't remember.
Anyway, this was sinking in when the teachers said 'So if your child has been getting 'S's all along in 2nd, that will translate to about a 'C'. UH OH.
I think I read that more and more colleges are beginning to look beyond the gpa as a simple number.