This happened to me once, and I think it's just a glitch (and it worked just fine, later). You are supposed to be able to run offline mode in such case. If you can't, try reporting it to Valve, chance are they'll fix that. Steam isn't perfect, but it's the best such platform we have. And Valve is improving it constantly. Compared to other DRM systems, I consider it very comfortable to use. Battlefield 3, for example, requires a constant internet connection (according to what I've read on the box) and let's not get started with Starforce or other such systems.
Steam would enter all CD keys for you and provide it's own DRM system instead of ones like Starforce (which makes me consider getting DCS via Steam). I'm not sure about games such as BF3 working in offline mode, but I don't intend to play BF3, except if Steam makes it available for chump change in a time when Euro would be cheap and Polish Zloty strong. (I prefer ArmA games anyway, they are more realistic and only use CD key as DRM).