Wow, that's a lot of people defending steam. I'm not saying all of you are overzealous fanboys, but I'm pretty sure if we replaced Steam with Origin, there would be a lot less of you defending them.
Yes the dude did something illegal, but we don't take his legal property away for committing a crime. Jail him or fine him, but don't take his house, games, car, fridge, telephone, etc. If he has to sell them to pay for his fine, that's okay.
Now some of you are going to say that he doesn't own those games, that steam is just a service. Well here in Europe he legally owns those games as his property. The EULA is not a binding legal document either. So if he is in the EU he can take Steam to court for basically stealing the games that he paid for.
I don't give crap if taking his games away is "a slap on his wrist", that's not steams call to make, that is not within their rights, and that is now how the legal system works.