The handheld scene is actually a great microcosm as to the overall effect of piracy on a device. Piracy for DS and for PSP is ridiculously simple, and only slightly more difficult for DS due to the fact you need to purchase additional hardware for it to work. Nevertheless, the DS creams the PSP at every opportunity. Why is that?
Quality. You just can't beat quality for moving units. It's a pretty well-known fact that PSP games, on the whole, are terrible. There are only a few AAA titles that make the system worth a purchase, but apart from that the modding community actually pushes the PSP a lot farther than it would have gone by itself because it adds a lot of functionality like emulators, comic book readers, chat apps etc. that make the PSP worth a purchase.
Now, consider the DS. It's a monster. Lots of people (including me) thought it was a stupid idea and would crash and burn. However, the developers stepped up to the task and used the input method in innovative ways to create experiences that couldn't be had on any other platform. This simple fact means that even though there's tons of horrible crap games for DS, the hardware and software will still move because the available quality is great.
I think one could easily argue that in the case of PSP, piracy has actually helped it, and in the case of DS, piracy hasn't killed it because the quality of titles is so great it will move units among pirates and regular consumers alike. Nobody wants to blow that big a chunk of change on a gamble that maybe the game doesn't suck horribly, and similarly most people who resort to piracy still have a modicum of conscience and will purchase something they enjoy, for the purpose of supporting the developer. Titan Quest, at best, was a lukewarm diablo clone, and the people who pirated this game (you know who you are) learned that really fast. If you test-drove a car and you didn't like it, would you buy it just because you sat in it? The flood of titles in the PC market makes consumers more discriminating in their tastes, and PC gamers especially demand quality (or they would be buying consoles and console games which is a decidedly less expensive route to take). If you can't provide the AAA quality that PC gamers expect, develop for another platform.
This comment was edited on Mar 4, 16:07.