I think there has been one GAO study on this. There are two main opposed lobbies: I believe: the Coin Coalition, which includes industries like vending machines, which wants the coins, and the Save the Greenback which has support from makers of the specialized paper and the cotton that goes into it. The employees of the bureau of printing and engraving support the latter, because the coin in much cheaper due to far lower wear, which would mean lost jobs.

As far as I can tell, this is a debate entirely driven by special interests that deal with the currency on a large scale. It has nothing to do with fostering illusions of low inflation. That said, inflation in the US has been low enough that a lot of things still cost a dollar or less, with a lot more things under $5. Carrying metal change is annoying, especially for men, but $1 is usually too much to leave behind as a tip for small purchases. So the dollar bill is not really a dinosaur. Since I mostly use credit cards, I often have only a few ones and fives. Tens and twenties are for ATM day.

This debate may become moot, because electronic payment may gain traction first.