Can the transaction log history size scale?
No, this isn't a likely problem for Bitcoin. Or, to be more specific, it is a problem that there known ways to solve. 

First of all, there is a concept called a selfish client. Which means a client that can create and receive transactions, but doesn't maintain the blockchain. It's considered "selfish" because it isn't performing the work expected of a true node on the system: it only maintains the information needed for it's own transactions. These types of clients are already common in the mobile world today, where 8GB is already too much to handle.

But if we got to a scenario where the blockchain was too unwieldy for the typical client, we would also probably be in a scenario where the network already had a sufficient number of server nodes to handle the "network".

Second, Bitcoin already has the concept of discarding transactions once they are spent. (It is made possible by the way that transactions are stored in the block: via the Merkle tree.) It is essentially not implemented yet, but the concept is there for when it is needed.

It's not inconceivable that we might end up with three tiers of clients: selfish clients on our mobile devices, master nodes that have all of the transactions and can trace any transaction ever made, and hybrid nodes that do support the entire Bitcoin protocol but only keep a trimmed version of the blockchain that prunes transactions that have already been spent. See this question for some details about pruning : Is pruning transaction history implemented in Satoshi&#39;s bitcoin client? .