The wipe was needed, as punishing a small amount of players would still leave behind the repercussions of their actions. Gradual deflation would happen over time as the thousands of gold were spread among the playerbase, but it adversely affects new players that get into the game too late. When relatively common items are selling for a couple gold a piece, you have a real problem buying gear unless you're already loaded up on exploited gold. They don't have several gold without significant time farming at 15-20 brass per kill, unless they get a lucky drop they can sell to get in on the action. This is boring, time consuming, and will ultimately kill the will of anyone trying to get started in the game.
What does a wipe do to the economy? Well, if you're significantly ahead of the game and you're sitting on a pile of cash, it wipes out your reserves. Keeping anything equipped means you're still perfectly fine to go out and enjoy the game. Unless, you only derive pleasure from having tons of cash on you, which explains the will and desire to exploit. To those I have no sympathy.
For a large portion of the playerbase it's less drastic, these players worked much harder for their gold, and it hurts. They will be starting at a clean slate, and also have a fair amount of decent gear equipped to be competitive in combat. As new gear enters the AH, prices should be lower or it'll rot for a couple days. The market will adjust quickly, and good gear will be available significantly cheaper (or it isn't going to sell quickly).