If a game I want is on Steam, I buy it there instead of any other way, including games that are on console and my Xbox 360. Doesn't always work out of course due to optimization issues etc., and there IS the down side of spending hours and days downloading a game like Fallout 3 (which weighs in at almost 7 Gigs) but for the most part I like it. Once you have the DL, you can make compressed and encrypted backup folder using the Steam backup utility, burn it to a DVD+R and put it on your bookshelf for next time. Reinstalls under that system are easy, you just copy the files back to your HDD from the disc(s) you made, run the program, and then log onto your Steam account again, and presto. The worst that happens is the game goes to DL a patch that came out after your backup.
Given that today, if you own a computer and play games, it's virtually a given that you have internet access, I believe the solution is to have online security verification. Sure, it's not perfect, and it can be hacked, but it puts the onus on the company hosting the server you connect to when you want to register your program and doesn't install virus-like software on your computer to work. If you have to do that anyways for your operating system, your office productivity software, your antivirus, and just about anything else, like say, Photoshop, why not just bring games into the fold?
But, the industry doesn't understand its own customers. It's just like how for a while movie theatres were showing those antipiracy commercials before the movie started. What, we all paid $13 to get in here, plus $10 for popcorn, and you've got the balls to lecture us about not stealing your movies online? Get stuffed