That idiot will just keep downloading other games until he finds one with a crack that does work for him. There's no lost sale here because he's simply not going to buy your game.
And neither will he steal it. Perhaps no one wins, but no one loses, either. I'll take a stalemate over a loss any day.
Well, you do loose one thing technically. Word of mouth advertising. If your game is good, it will be talked about. Maybe the pirate wouldn't buy the game to begin with, but if he tells 50 people that your game is unbelievably cool, chances are that at least a few of them will actually dish out money to buy it. You may have lost 5 people who would have never bought the game, but if you get 5 customers to pay who wouldn't have ever picked your game up, you're ahead.
It's a similar idea to why some bands have no problem with MP3 trading. It gets the product out in the mainstream, and raises awareness, which is the most effective advertising, since it is the kind that most often works, and is the cheapest to boot.
Oh and Some Dude, SFC 2 is perhaps one of the most entertaining games I've ever played. Thank you for that. Shame that it always had more than it's share of bugs, but I still have multiple copies sitting around, and play it regularly. I never played online Dynaverse really (just network games), since that was a nightmare, but even though I probably could have easily pirated the game, I never did. I even bought multiple copies so I could play with my friends. The word of mouth I gave sold even more copies.
Good games sell themselves, even when taking piracy into account. At this point, it's hard for me to completely condone crackers and piracy, because games are getting pricey these days, and the demos are getting obscenely short. I mean really, a gig or more for about 15 minutes of rudementary gameplay pisses me off more than it makes me want to play a game.
I can't even remember the last demo I downloaded and tried, let alone the last demo that actually sold a game to me. They're usually such a horrid example of the overall game as is that it's almost more worth it to get the cracked version, play it for a few hours, and pick up the game proper if you really enjoy it.