Piracy has not killed demos. It was actually game developers and publishers that killed them, and piracy trived because of this.
The purpose of a demo is to give the player a taste of the game, so, if interested, the player will buy the game. Heck, there were even full PC games that were shipped with a demo disc so that you can give to a friend in order to spread the word. Who knows how many games became popular thanks to these demos. So why did many developers and publishers started to axe them? The answer is simple, making more money.
Because a demo is always free, many more people play the demo that the actual full game. And the reason is simple: if you don't like the demo, you don't buy the game (either the game is bad or is not worth full price). So they chose to axe demos so that the player has to buy the game "if they didn't like the game, it's their problem" policy.
While piracy existed well before demos and even games. It found a golden mine once publishers axed demos. People that don't want to buy a game unless it's really good will download a pirated (cracked, patched, serial, etc) one and play it. I have downloaded games via torrent, but only a few were so good that convinced me to buy them while the majority are uninstalled and thrown away before I even reach the first half of the game (out of boredom).
I favor demos, because i bought many more games with them than with torrent downloads
Demos are more trusted, because the develoeprs maintain them and you are less proned to viruses or any kind of malware. So I agree they should return. You can give demos to friends to convinced them to buy the game.