At some point in time, there has to be a restructuring of Greek (and possibly Irish) debt. Are the consequences of a haircut to creditors likely to be catastrophic?
Probably not; in fact, a debt restructuring may be the least-worst option to resolving the crisis.
Here are a few interesting articles related to the Sovereign Debt Crisis:
Impact on Germany if Greek debt is restructured:
Options available to Greece
http://www.economist.com/node/18744305