I would comment quite a bit of things that appeared on the original post:
The first of all: developers don't really need to protect the games.
As some posters pointed, Galactic Civilizations 2 came without any type of copy protection. You could download off a torrent and play the same game someone paid for. Also I want to point that you could download the updates off P2P. What you really got by purchasing the game was, mainly, a nice manual and poster with the tech-tree (quite handy), and the fuzzy feeling that you're contributing to the developing of more games like the one you purchased.
And I can see Stardock is still developing games. Also, I have to say that it's update system makes more convenient to update a game than downloading via P2P, thus adding value!
Original Post commented about how radiohead's album got pirated even if it could be downloaded for free on its webpage. Now I haven't downloaded radiohead's album (one way or another), but I guess you didn't just went to radiohead and there was a huge button called "download our album". For the screenshots I saw it was some sort of online purchase, except you didn't paid nothing. Probably involved registration, though. Now the pirate way: I go to mininova, search "radiohead", click on download torrent, ????, profit!
The issue is similar to DRM, and it's called "conveniency". People will always take the easiest way, if they have the chance.
And, for WoW DRM, I would like to mention the existence of "freeservers". I haven't played on any WoW freeserver, but I played on quite a few Ultima Freeservers, because they were fewer people and I didn't had to wait 30 (and excuse my english) f***ing months to be a good tailor. Not everyone can afford to pay a monthly quote to spend two or three hours a week slowly building the character. And I have a lot of friends playing on Lineage Freeservers, and they honestly think these servers are better than the original.
While Freeservers may not have all the features of the full servers (namely, they usually lack events), they compensate it with unusual features (on my favourite -and sadly deceased- Ultima Freeserver I could grow and harvest my own flax! and then spun it to make yarn!) and more often than not are underpopulated wich suits my style of playing. I think that defeats the "WoW DRM" easily.
As for DRM itself, the main problem is the same that with another DRM: you stop owning the game you purchased. You cannot lend it to a friend, you can't resell it if you don't like it, you can't rent it from a shop because of the same DRM.
A faulty implementation of DRM may lead to performance issues (like what happened with morrowind, with people installing the no-cd patch to increase performance), and of course, to usability issues. My laptop doesn't have an internal CD unit. it is located on a dock. That means that if I want to play a CD game on my laptop (while not on the dock) I have to apply some type of patch.
Steam is the classic example of well implemented DRM. It still has the issues of the DRM (I can't play most games if I don't have an internet connection, I can't resell a game I don't like -Sin Episodes anyone?) while on the other hand it offers some compensation (you can play it in any computer you own, activation is really easy). While I like what Valve is doing with Steam, I still have issues about purchasing games in it because of the DRM (and also because I like to own a physical copy of the game, and Steam games rarely come with freebies).
At local level, I see the main problem in my country is that the games are as expensive (or even more) as in america, while salaries are perhaps half (or even less). I have a good income for people my age (~1200€/month plus some extras doing conferences) and still, after paying the bills I end with about 200€ for spending in things I like. Now, usually people in the "playing age" in spain (20-25) earns about 600€-1000€/month. An Xbox 360 game costs 50-70€ a PC game 20-60€.
Also in Spain, as Pyro's developer Gonzo Suarez put it bluntly, "there is shame on purchasing original software". Fortunately, this mindset is changing, thanks to the efforts of distributors like FX interactive that brings good games at an affordable price.
A quick reply now to OsCoder:
Thanks to DRM second-hand shops may be out of bussiness. Gamestop stores in Spain refuse to purchase bioshock for PC because of the copy-protection scheme involved.