As someone who has, admittedly, pirated games previously, I figured I'd throw in my two cents worth. I'm not going to go over the whole moral argument, because its pointless. People have different morals and the varied sides of that argument will almost never sway the others to their side.
What I'd like to bring up, however, is how and why users fall into the piracy side to begin with.
The article Spartan linked does hit it on the head, largely -- a better experience via pirated versions than legally purchased versions. One can argue that you can do both (buy the game, then pirate it for the better experience and be in the "right" completely), but that could also, arguably, lead to a continuation of the process that motivated one to
have to do both and does not really result in an eventual solution.
Personally, the first time I pirated a game it was shortly after Age of Empires 2 had been released; I bought the game, at a whopping $90 CAD (normal version, not some sort of collectors edition). I found this a tad insulting, but figured since I enjoyed the hell out of the original, it was worth the price. Needless to say, I disliked the sequel. Partly due to design decisions made that just turned me away from enjoying the product, and partly because of the hardware/software compatibility issues mentioned previously in this thread; the game was often crashing on me, despite myself having an up-to-date everything (it turned out the problem was an issue with the up-to-date drivers, and not the fault of the game).
Back then, as a student in High School, $90 was more than a fair chunk of my income, and it burned me out on the blind-faith purchasing of games, as the return policy back then (and still in place today in many regions) was that an opened PC game package was non-returnable, due to the "piracy" concerns (i.e; buying the game, copying it, then returning the game). I started to avidly use demos, reviews and the like to try and minimize bad purchases. It didn't help much. Scripted demos, or demos where the game ran flawlessly, but the same level in the retail version was buggy, made one jaded to the value of demos. Reviews have always been iffy; and are even more so now due to ever increasing need for review sites to be profitable and actual companies (so they can get advance copies of the games, get into the various functions, careers, etc; where in the "old" days, most review sites were simply fans doing it in their free time).
So, I pirated games so I could "demo" them properly before purchasing them. And it stayed that way for awhile. And then I met Starforce protection. Downloaded a game, played it.. loved it. Bought it. And as many others would also experience, had issues due to Starforce. In one case, I had to replace my CD drive because of it. And that was when I "had" it. I stopped caring about the moral aspect of pirating games. I could no longer
trust retail versions. And because of that, they no longer
deserved my money.
Yes, I admit what I began to do then was "wrong", but I didn't really care. I started to pirate almost every game I wanted to play; a trend that I've only recently (last year) stopped, in part. I've gone back to the demo-pirate reasoning, but as more stores in my area are more open to returns, that likely will change soon. The motivation for my change of heart back into purchasing games was a simple one; by being able to download so many games, pay nothing for them.. it somehow removed the enjoyment. I was playing games, beating them and doing it as quickly as I could, so I could move onto the next game. I was no longer playing games to enjoy them. When I realized that, I started to download games again to test them, then buy them if the DRM was a non-issue.. and I started to enjoy gaming again.
But I'm a tech savvy, hardcore gamer. My mother, however, is not. She is the type of gamer the industry wants to tap; the casual gamer who has rarely ever played video games. The Sims got her into it.
And a couple months ago, she asked me if it was safe to buy one of the expansions to The Sims 2, because on the forums.. people were complaining of how the protection scheme (Securom) was causing issues, and in some cases, making bricks out of their DVD players/writers, amongst other issues.
And then my mother asked something; if I would show her how to "pirate" the game. She'd bought the expansion, but was
scared to install the retail version. Scared to install a purchased product. And with something like The Sims 2 expansion, one of the most common entry-vehicles for the masses into gaming. Scared.
And that is something the industry has to change. Losing me as a buyer is nothing to the industry. I'm a hardcore gamer, I'm a part of the minority of the market they sell to. My mother is part of the lucrative majority, and the future of the industry's expansion. And people like her will do one of two things; fall into piracy out of mis-trust like I had, and like my mother ended up doing (which was in part due to knowing I had/have pirated games), or they will simply walk away from gaming. And I believe most will be the latter of the two choices, because of the very fact they are so casual. They will have no qualms about simply.. not gaming.
Sorry for the length, guess its a tad more than my two cents worth, but oh well.
Quality and DRM are the two biggest reasons of piracy to exist. Almost everyone I know who pirates, or has pirated, games fell into doing it for one of those two reasons; usually both. And once you started getting something for free, it becomes harder and harder to walk away from it. Its intoxicating, especially in the hyper-consumerism and high-priced costs of today; getting something for free at virtually no risk.
But, most people are willing to shell out their cash for quality, safe products, as online music stores have begun to show, even with mass availability of quality, safe pirated versions. The question is if the trend will continue, or if the gaming (and movie/music) industries will continue to alienate potential customers by making purchasing harder and less rewarding than piracy.
[For the record, I purchased Sins as a pre-order, before its release, due to a friend who was in the Beta, and prior experience with Stardock via Galciv -- the game isn't really my thing, but that's only due to design decisions, not quality issues, and thus I'm happy with my purchase [even if delivery took forever!

] due to that.]