Some people are just resistant to change. When the old LP vinyl music albums were being retired from store shelves, people came up with all kinds of excuses why vinyl was somehow better and more authentic. Then people didn't want to give up their cassette players, because they had so many music cassettes. Music CDs are now rapidly becoming outdated as iPods and MP3 players are the norm for music.
Games and services like Steam are no different. People just are having a hard time coping with the fact that a physical CD is no longer necessary or even that efficient. As more people gain access to high-speed internet, digital distribution will become the norm.
It actually has very little to do with that, and quite honestly... we will never move past physical mediums.
Mp3 has been out for over a decade, and yet CD's and other mediums are no less relevant. Indeed Vinyl and other older formats are making somewhat of a comeback as slightly more than a niche market.
People are resistant to the idea that they cannot own something they paid for, and indeed there are MANY instances of electronic media that people do own... or are at least free to operate with no strings attached. When you have a physical copy of software, with no strings attached, regardless of the EULA... you OWN that particular piece of software and are free to do with what you wish. Abide by the EULA or not. Steam reminds me of having a cop in your car just to make sure you don't exceed 1/4th a mph over the speed limit.
In truth, Steam has very little to do with piracy or ease of use. Its more akin to monopolizing distribution and cutting out middlemen to force people to buy an overpriced product.
I can't exactly reference certain sites here, but you would absolutely be surprised by the surge in activity at the sites that Steam is supposed to be cutting out. I would estimate that new users for this specific piece of software, Skyrim, has probably doubled or even tripled just because of Steam. Though I've only read comments in other forums in passing, so wouldn't exactly know directly.
I, personally, associate Steam with recent initiatives like COICA/SOPA/OPEN/PIPA... or data mining that reminds me of Google or Facebook (There is a Google Tracker on this very site) ... or iTunes and the way it functions.
That is why I don't like and will never use Steam, and will never buy a product from Bethesda for PC. Keep your mods, I'll keep my privacy.