As has already been established, you don't need DRM for Law abiding citizens, as they are already paying for the games. Also established, DRM doesn't function as any sort of barrier for pirates. So DRM fails at it's intended purpose of preventing piracy, and your counterargument is that if we stop using it people will stop paying for games? There's a logical fallacy right in the center of your argument.
No, what I mean is this. There are people who don't torrent and don't know how to apply a crack, who aren't in the loop, just aren't offended by DRM, spend their time on other more rewarding things...
For that demographic DRM is 100% successful. For the other, probably vastly larger group of gamers who do, there is no effective response. So, yes, you punish your core consumer base because it's what you can do. In the end it works out better than doing nothing.
You guys need to wrap your heads around the fact that DRM can be effective for some people. The speed with which games are released illegally, or the ease with which DRM can be bypassed doesn't change that. When DRM gets draconian it's because the companies think they finally know a way to get ahead of the curve, and they are mostly wrong. This is all true.