Warning; Off-topic message below, avert your eyes if you do not wish to read it.
Now, as to the assertation that things are inflated.....
Of course they are. Neopets, while it is not democratic, has an economy closely resembling a democratic one. Each item, like it or not, is priced according to supply, demand, and relative value. The problem is not with the items, or the users. (Although, some items are falsely inflated, which also happens in real-world economies) The problem is with the neopoints themselves.
Each item holds a value in the currency of Neopets (neopoints). Wether it be great or small, that item can be traded for currency, which means that neopoints have a value of their own. Few neopoints in the economy mean that each neopoint is highly valuable, since there aren't many shared among the general population. Thus, a rare item, (say, a paint brush) may be sold for only 10,000 neopoints, and the person would consider themselves to have gotten a good deal of money for it.
However, the Neopets system is intrinsically flawed. As more games are created, and more users join, the total amount of neopoints in the system increases. Therefore, the value of each individual neopoint goes down. Since there are more neopoints to go around, the cheap paint brushes are either purchased, or shop owners raise their prices. The ratio of neopoint to paint brush changes, since there is only a fixed amount of paint brushes available, and the supply is being decreased faster than it is being increased.
The major problem is, there is no system to remove neopoints from circulation. If neopoints were being removed, say in the neopian shops, the value of the neopoint would rise again, causing the price of items to drop, since you can now buy more for your neopoint. But at the moment, it is theoretically possible for someone to play the game
without ever removing a single neopoint from the system. Since the neopoint is constantly increasing in volume, its value will always drop, while the items, which remain at a relatively fixed volume, will rise in price.
Hope that makes sense.

Now, on topic. Thanks for warning everyone, I hope if it IS just a prank, that those people will be caught and punished. It's just as bad to try to cause panic for your own laughs as it is to abuse a glitch.
I agree with amarise's general assessment of the situation. However i think one of the problems with the discussion of inflation that is rarely addressed is the rate of inflation.
Items, at least paint brushes, and fancy battledome items are inflating at a rate equal to or greater than the rate at which the average player can make NP. This means that someone who is saving up to buy, say, a fairy paint brush, will never be able to afford one, no matter how long they save.
I think what neo needs to do is create more money sinks. For example have more fixed price unlimed quantitiy neopian shops (hidden tower style) or have training schools where players actualy pay in NP. Both of these would create significant money sinks and help re-balance the game.
As for the duped items does anyone know what happened to people who used them? Ie: someone who purchased a paintbrush and painted their pet, thus destroying the evidence of the duped item?
I seriously hope that they unpaint such pets as well as removing ALL duped items from circulation. I'll feel bad for people who lost good np in such a transaction but it woulld be horribly unfair for them to let anyone keep them.