As a reader, I'll never again buy a DRM-locked book because of all the hassles that happen with MS Reader whenever I buy a new device. Activation limits, the process not working with the latest OS, etc etc. Sorry, no thanks. I feel burned.
As an author, I'm experimenting with eBooks and finding that offering them for free, unlocked, is a good way to reach people who are:
a) far away
b) possibly hesitant to spend money on an unknown author.
I've created properly laid-out PDF and LIT versions of my novel for my website, but the host of
www.ManyBooks.net has a script that can turn any sort of raw text into just about every e-book format going, and I've had way more downloads (in the hundreds) from his site.
So that's my experience in the field.