The second part of the argument is will the UFC become basically the only dog in the fight, and if so is that a bad thing? I know that the immediate response is of course it's bad. But lets look at the facts. Does the NFL suffer from being the only league people care about. Honestly how often do you watch Arena or the CFL?
Imagine if you didn't have to wonder what would happen in the Silva vs Lindland fight. Imagine if Fedor, Couture, Barnett, NOG, Lesnar, and Arlovski had to fight each other. Separate titles is killing boxing.
One thing I would say that is absolutely necessary for the UFC if they are the only fighting organization. That is a fighters union, similar to the NFL players union. That would guarantee good salaries for fighters, set up health care and retirement plans, and help solve ranking and other grievances. It's just a thought.
I want to see the best fighters fighting each other. There is only two ways for that to happen;
1) Unlimited cross promotion if there are multiple large promoters/organizations.
2) Having one organization that is the universally recognized "top", the equivalent of the NFL. Smaller orgs would exist as a feeder system.
I would be happy with either situation but I think #1 is impossible so I'm rooting for #2. A monopoly is not a bad thing IF there has been sufficient competition leading up to the monopoly. As long as the creation of the monopoly involved significant competitors then the fighters will be treated reasonably well and their salaries will approach market value.
If you look at the 4 major North American sports they all followed the pattern of having a number of competing leagues that either merged into one or saw all but one fall by the wayside. The end result of one dominant league is best for the fans because all the best talent ends up in one place.
Early competition followed by monopoly, that's what we want to see in MMA and that is exactly what we are seeing right now I believe. Ultimately I think the UFC will end up as the single major organization (as long as there is one I don't care who it is, UFC, Affliction, whatever).
The fighters will probably need a union but the threat of competition is always there (see the XFL in football, the WHA in hockey) to keep the "main" league honest.