Somehow I get the feeling that what you think about Steam has mostly been shaped by whether you first experienced it as a downloading platform (as I did) or as an activation platform (as many others have). The latter kinda seems to make you put it in the "additional hassle" drawer.
Nevermind though, I understand the point. I can see that acceptance of digital distributions varies with what expectations in the product, internet connection and trust in the company running it. And I have to admit, I LIKE Valve, and I think they do have the customers' interest at heart.
Something else that comes to my mind: Whenever someone says "digital distribution", everyone thinks of Steam. BUT come the switch towards D.D., they probably won't be the only players - they're not even now. There's to scenarios, and I don't know whether I like them:
1. We'll see a lot of different digital retailers... all with their own DRM, own servers, own everything - so we'll need accounts for all of these. When we re-install Windows and want all of our games re-installed as well - what will we do? Go to every single service and retrieve our stuff? Also, you'll have to remember which game you bought where? I don't know if that will be a progress.
or
2. With respect for that, one provider (Steam being a likely contender), or maybe a handful of big players, will see all of our purchases. While that's convenient, on the downside it will also minimize competition - especially with respect for prices. I don't know who makes the prices on Steam, XBLA or PSN - but I hope it's not Valve, MS or Sony.