As I tried to explain in the Guardian interview, the problem isn't that books are given away or that people read books they haven't paid for. The problem is that the majority of people don't read for pleasure.
Here is yet another author talking about how giving away books for free is a good thing, and tends to increase sales of other books. John Scalzi talks about this often. So does Charles Stross, and Cory Doctorow. And Techdirt talks about the value of giving away infinite goods to generate interest in scarce ones.
I first read Scalzi's Agent to the Stars shared free online, and then bought some of his other stuff. I first read Stross' Accelerando shared free online, and now preorder his novels before they even come out. And I first read Gaiman when I got Anansi Boys from the library.
My long-winded point here is that I have frequently purchased books because I read something the author had shared for free and I liked it. So I sought out more from that author. When someone finally makes a reasonably priced, non-DRMed ebook reader, I'll do this even more. I have a bunch of free books saved on my hard drive that I haven't read because I don't want to sit at the computer to read a novel. Give me a good way to get that book over into the big fluffy chair in the sunroom, and I'll be thrilled.
However, I quoted Gaiman up above for a reason. It is interesting that he says that most people don't read for pleasure. I don't know how true that is in general, but I know many of my friends don't read much or at all. I've gotten shocked reactions from people when I tell them that I get books out of the library (Although not so much lately now that I'm driving to work and don't have an hour on the Metro to read every day).
It's too bad that people don't read more. I have fond memories of reading while growing up. It was great to not even hear my mom calling me because I was so wrapped up in the book. See, kids, that's a great excuse for ignoring your mom. Try it sometime.
Edit: I should have checked Techdirt before I posted this. They have an article on this very subject up right now. And now Cory Doctorow mentions the very same Gaiman post up on Boing Boing. If I link to a post that links to a post that I already linked to, maybe we can create an infinite loop that creates an vortex in the internet which will spit out the Ghost of Christmas Past to visit the CEO's of Sony, Time Warner, Random House, Apple, Adobe, and all the other DRM-mongers and show them the error of their ways. Then we'll all wake up Christmas morning with open source ebook readers under the tree and thousands of free ebooks waiting at Amazon.
Do you read for pleasure? Fiction? Non-fiction?