From some of the gaming podcasts I've heard, it seems that most casual gamers don't care. It is just the hardcore gamers / early adopters that are upset.
I am wondering if Microsoft just hired some marketing company to do a focus group or random survey which came back in favour of all of these policies.
They should have looked at what happened to the PSPGo. That was a great device, but the digital only distribution (most likely to combat piracy) did not go over well with users.