i will be the first to admit that piracy is like pandoras box for me. and apparently a lot of other people too considering i just saw a statistic saying 1,000,000 copies of spore were bought legitimately, and 400,000 were pirated. the only downside of getting things for free that i can think of is that someone behind the game/song/movie/software sweat blood to ensure you were able to enjoy it as much as you do. as a result this person might not get the compensation they deserve for their efforts, and ultimately might become disgruntled and stop making things for you to download altogether. it is already starting to happen to PC games. the market is slowly dying off and one day new PC games might be a rarity.
human nature isn't going anywhere, so as long as people have the means to do it, it is going to be done. and the means will always be there, because for every brilliant mind that thinks of a new way to make it harder for you to pirate the latest game, there are 40 equally brilliant minds that don't want to pay for said game. some companies like EA and microsoft are so disgustingly massive that i don't think any amount of piracy short of 100% would slow them down at all, but smaller more indie games are definitely hurting.
i've gone way off topic as i usually do. pirating windows is bad, and illegal, but microsoft could go the next 500 years without making a cent and still have enough money to give each high level executive a 20 million a year allowance for hookers and lap dances.