This whole product activation idea is a can of worms and while the extent to which it invades our privacy is minimal now, you can expect it to get much worse over the coming years.
From the perspective of the software companies, this is just the "softening up" phase. Once the majority of people are used to product activation, the demands on your privacy will increase.
Quickbooks, here in Australia, are already charging a fee for product activation. I have also spoken with people who tell me Microsoft have done the same, but will waive the fee if you challenge them on it. You can bet that situation worsens.
And to make matters worse for the honest people in this world who suffer through this decline in their rights, and, as you quite rightly point out, anyone with a broadband connection and the ability to carryout a Google search can download and install a pirated version of almost any software they like within minutes.
Has the idea of product activation even made a dent in the level of piracy out there ? I think not, and yet software mfgr's continue to pursue the idea. Call me paranoid, but don't deny there is a definite effort afoot to water-down the rights of the consumer.