I can't help but think about Steam after thinking a little bit about piracy. Is Steam really working to its intended function? I honestly don't think so. In fact, I find it funny that a pirated version of Half-Life is actually less of a hassle to install than the original copy. Apparently, it's encrypted on the install discs themselves, and you have to register an activate it on Steam before you can do anything else. For a select few, this process actually failed. In addition, apparently there is a huge bug in the software somewhere, and it allows a specially engineered client access to everything someone can download off the Steam network. In fact, it is this type of client specifically targeted during the culling of large numbers of accounts by Valve. However, the process of regaining access is simple: create a new account.
Steam is also supposed to punish cheaters by hurting them financially. This hacked clients allow them the convenience of saying: "Ban me all you like. I'll just go create another account."
I think Steam is hurting paying customers more than it is helping. I mean, let's say you pay a good USD49, you expect a good game. First, you're shown that you need to connect to Steam to decrypt the files found on the install discs! Argh! The files on the disc are not the game as it is! Then, you find that you need to register for an account first. You do so, and all the stuff magically comes to life. After that, you find that you have to download an update to fix a stuttering problem. (how come Valve didn't see this coming?) After that, you finally get to play Half-Life 2.
After having a jolly good time, you install Counter-Strike Source from Steam and find a new world waiting for you out there. After playing an hour or so, you realise you are finding a godlike person in the game, and you realise he's a cheater. Everyone else bans him away! Later, you find another one, and you ban him too. This continues perpetually until you find the new CS Bots are actually better at playing fair than humans are.
My opinion: Valve should drop Steam or any attempt to protect their games too heavily. Something as simple as a WON CD-key check did the job the last time. A CD-key check when a player wants to download (or install) an update hasn't exactly failed in the past either. Steam just plainly doesn't work. My advice for players: Don't play online until Valve has all the kinks worked out. Apparently, they are awful when it comes to beta testing.