First, let me state that I, personally, don't see any reason to upgrade to XP. I have Win2k/Win Me (Linux shortly) installed. It's stable. My devices all work. My programs all run. And I have the third party utilities that add the functionality that XP will add to Win2k/Win Me. So, I doubt I'll switch for quite a while (if ever).
I certainly hope that SP-2 doesn't require you to register in order to work. That would be a pain in the ass - I'm always polishing my hard drive for one reason or another.
I think that piracy is a legitimate reason to do something like this, but I have to wonder if it's really going to cut into Microsoft's losses to piracy sufficient enough to offset the losses they may see (probably only initially though) due to a disgruntled public. (I, also, wonder to what extent piracy compares to Microsoft's revenues. )
I suspect most people still purchase their OS with their computer. XP will be the OS installed on those new computers. Therefore, only if the computer buying public starts clamoring for Linux, BeOS or an x86 based OSX (which I don't see happening BTW), will this registration scheme fail. People that shop for their OS and try out alternatives are in the minority. I just don't think the hobbyists and such that do will have much of an impact. So, it's going to happen and any market backlash is likely to be minor, in my opinion - so it's probably here to stay as well.
I believe that Microsoft would love to move into subscriptions rather than the one time licensing scheme they currently have. I see this move with XP as part tech-demo, part public reaction test, part public orientation/indoctrination which may/will ultimately lead to a subscription based delivery of Windows.
As I said earlier, piracy is a legitimate reason to do this; however, I think the longer term goal is getting everyone accustomed to a subscription based Windows. Unless the personal computer market stalls out completely or Joe Sixpack starts demanding Linux or some other OS, expect to see the next version of Windows (post XP) to be subscription based. I think you're being introduced to the idea now.
just my opinion ... I'm sure there are others