This is a good thread - I'm usually a lurker but this one "brought me out of my shell".
I am involved in three different games, and we play faily regularly. There is SO much stuff (much of it good and some not so good), that even playing three times a week for several hours - it would take years to wade through all of the material out there. (BTW I don't play three times a week for several hours, although I might if I had the time

) I have a TON of PDF's and honestly, I'm sure I'll never use all of them. Of the newer "illegal" copies, ALL of the PDF's I have downloaded
and used I have bought. I do have a bunch of newer PDF's that I have not bought, but I have not yet had occansion to use them so I "hoard" them on my hard drive until they might prove useful. (Then, if they do, they get bought).
Most of the PDF's I have downloaded are older out of print modules and accesories. These, due to their size and the difficulty in finding them, I tend to print locally if I am going to use them.
I do not know if it applies to the RGP industry, but I know in cartographic publishing when a map goes out of print, it is no longer under copyright. You can make all of the legal copies of out of print maps you want. (I worked for a good sized map publisher and sold copyrights for several years). It would seem to make sense in the world of RPG's but I do not know if that is the case.
So I guess I am in the group of people that would say that filesharing has
helped the industry - at least from the standpoint of the 11 people in the three groups of which I am a part of. We all have downloaded material and honestly, almost everything we have used, each of us also have hardcopies which we bought. Furthermore, we have ended up with books I know we would not have bought if we didn't have the PDF for previews.
As for PDF products to begin with: As far as I am concerned, if I downloaded it via filesharing first and ended up using it, I went ahead and paid for it legitimately. However, that said, I don't think I'm the norm in this regard. Also, to repeat what many have said here, I love the "feel" of the
book in my hands. Even though I know there are many great PDF products out there I only have 5 that I have paid for because I have only
used those. (I have other "illegal" copies but I have not yet used them so I am not counting those - and again, if I use them, I'll go out there and pay for them).
Finally, for the record I agree with those here suggesting a more direct method of distribution. (In fact, I believe this is the heart of this issue, in all of the mediums in which filesharing is effecting.) With the access their consumers have to the internet, corperations that are in the business of distrubution realize they can be very easily replaced. There is no need for corperate "middle-men/distributors" because word-of-mouth is now more powerful than ever (and growing more so). I don't mind my local gaming store getting a cut, but otherwise, I want the rest of the profit going to the those who produced the product. I know this means my local shop may not have everything out there, but I'm willing to get on message boards and websites to see what products I
have to have because everyone is talking about it. (And then go back to my local shop and have them get those products).
That's my two-cents