I'm all for digital distribution, I got the first season of Sam & Max that way. Steam just rankles me to my very core with it's model of online distribution though. I want to get something and be done, rather then having to constantly connect for no damn reason. Steam is why I don't own Half-Life 2, because it's a freaking requirement when you pick up a box copy! Everyone hates Microsoft's stupid "Windows Genuine Advantage" because it presupposes you're a pirate, so I can't fathom why designing retail software that requires constant "phoning home" to play offline is a viable model.
I have no idea if it impacts performance when you're not running an application that uses it, as I won't allow it anywhere near my system.