Its not up to mIRC to prevent the spread of illegal or pirated material on the internet. First off, limiting the file sizes, as many people have already said, will not stop it. It will spread to more services like Napster or kazaa or they will find ways around it (like not upgrading, or splitting files, etc)
Its really up to servers, for one. A server or network that has more illegal trade than most, like Dalnet, should probably find a way to prevent it themselves. They could easily do this since the DCC info goes through the server as a private message.
A DCC goes through the server like:
:Nick!User@Host PRIVMSG Target :DCC SEND file longip numbers that I have no clue as to what they actually mean
The file size might be one of those two numbers at the end.. I think one might be the port. But better yet, the server could be modified to record the kind of files that are sent. Then they could begin blocking files that are blatantly illegal.. they could prevent a DCC SEND with *.mp3 as the file name from reaching its destination for example. Or they could prevent fileservs from connecting.
In the end, mIRC isn't a file sharing utility. It was not made to be one like napster or Kazaa.. it is simply proof that someone who wants to do something illegal will use whatever means he or she can. I doubt seriously that a government agency or a company could find a good reason to shut down the mIRC project or sue its creators (and win).
The servers that allow the spread of these materials without doing anything to stop it (I name Dalnet again, because its pretty infamous for this stuff) are more to blame.
Before I get shot by server admins (I own my own network, please don't hurt me) its not your fault either. Some, for example, just have no friggin clue how to edit their servers in the way I just described, or feel it isn't up to them to go to extreme lengths to prevent people from being l`il internet criminals. So... failing the previous solution... I guess we should live with it for now. It hurts the economy, it sucks, etc etc, I know. But if the only way to deal with a problem causes the removal of privacy or causes people to lose functionality and ability online.. is that better?
My wrists hurt now, I think thats my cue to push the post button.

I am the self-appointed God of needlessly complex mIRCscript.