I don't think we're going to see a wholesale collapse of the euro, forcing all the participant countries back to their old currencies. Germany, France and most of the Eurozone members in northern and central Europe really are not going to quit. And it would be kind of surprsiring if Greece broke out in the next two months: that's what they want to avoid at all costs and back to the wall they will avoid it. But in the long run Greece, Italy and perhaps one or two more are likely to have to step out and restore their old currencies. They have lost a huge amount of credibility, and stand to lose even more, both with the other EU countries and with banks, companies, and their own citizens. They're in for a long "bathe of steel", years of austerity and tough dictates, but if they have to keep marching in step with the levels of interest rates, currency values, pricing and so on of Germany and the rest, they would near break apart.
There is NO way Greece or Portugal can compete with Germany, France or the Netherlands in industrial level, ability to make export money, public health facilities and schools, or the reliability of their tax collection. Had they kept their own currencies, they would not have landed in this situation. With the euro in place, they could ride high on the strength and credit ratings of Germany and the rest, borrow lots of money and attract banks and lenders who, in turn, goaded everyone into taking up big loans out of the blue. And it must have been obvious to many people in the EU bureacracy and political class that this was the game being played, only it wasn't something either part wanted to say aloud.
Now with governments changing every one or two years and the cabinet and national bank having handed in their gears to the ECB, there was really no accountability. You can't win an election by telling people that the future looming around the corner is very dark and that they have to bury their dreams, stop loaning money and reset their loans, sell off property, break off education for their kids and work harder for ten years. And if the basic deals you've made with your family (the EU/the Eurozone) mean you have very limited tools to do anything even if people are aware, then you won't even bring up the questions.
The euro, as currency, was a political project at heart: the motives were political not economic, and there has been a lot of dishonesty, smoothing or glossing about this. It still is political of course, but it will no longer be as feasible to try to pretend otherwise.
The currency will survive in one form or other I think, but it will have to be with some tighter control - which will really make it plain that there are issues of sovereignty and accountability in joining it. And some countries are likely to have to leave or avoid joining, because they just don't have the economic strength needed.
State default? Well, Greece is already being kept on the books by suspended animation - by massive lending from the north and promises of a debt write-down. If 50 or 70% of the state debt is written off, and the country is kept going by influx of money given by Germany, the IMF and others, then it is effectively a state default in everything but name. Italy, Spain and others could well land in the same situation within the next year.
Sweden held a referendum on the euro in 2003. The entire establishment was for it - most major newspapers, all the larger political parties, the banks, the corporate sphere, many unions, most academic economists. The pro-euro side was massively superior in funding and in access to the media for their take on things, and tried to sell it as a simple wallet reform - "hey, now you won't need to change money when you go abroad! ain't that cool?" and "it's in the stars anyway, don't be against progress, old hat". But they never really managed to get the upper hand in reaching ordinary people, or in getting the debate intiative. The no campaign, which recognized that the issue was about sovereignty and about what might happen in a crisis (a dimension completely ignored by the yes side, which painted the euro as an unsinkable ship and a magic wand that would remove the risk of recessions or mass unemployment forever), was on top all through in opinion polls and finally won by a crushing near 60%. Any attempt to revive the issue since then has been mostly stillborn, though senior politicians have tried - only a few weeks back, two earlier PMs appeared in interviews where they claimed the euro was the only way. A singularly bad-timed move by those guys!