Filesharing that is illegal isn't a good thing because it deprives an artist of their piece of the pie.
However, to treat the consumer of your product as an 'enemy' and a 'pirate' is just bad business - you don't chase down a shoplifter and beat him senseless, you cross it off as 'oh well, bound to happen' and provide a wider range of free samples (mmm... free candy)

I think what angers most people is the exspense involved: $35 AUD for a CD whcih is made of 25c worth of plastic and a whole lot of burn marks is quite stupid.
It's been shown by people with cd burners doing things on the sly that you can make a healthy profit by selling stuff as low as $5 a pop - sure thats illegal but it's demonstrated its quite possible.

Same thing with books - horribly exspensive, and for what?

Most of these items only have a limited period of mass-selling, and 6 months later the stuff is on the trash heap of industry...

The solution here is to stop with Gestapo scare tactics against the consumer and look at new ways to do things - the EFF offers several solutions.
My favourite is, as it offers something for both artist and end consumer.

I think the other problem with high cost, low value wares (not warez) is the middleman being supported - Hopefully we WILL see a huge loss of jobs of agents, bigwigs, and the like who milk an artist and take huge chunks of their hard earned money - unfortunately it'll be the blue collar worker who probably ends out on their ear first.
It doesn't take any more than 3-4 people to get a book published electronically (author, proofer, promo guy and distributor guy), and costs very little to do.
If you sold online books and music at something just over their actual costs, we wouldn't have these problems.

Now, as for the IRC being a medium...
IRC is a means of communication. If MSN wasn't stuck through their servers and offered an open forum of communication between strangers, you'd see files being passed around or at least links to such things as FTP dumps and the like.
Its not going to go away.
Prosecution isn't an answer.
Change by both parties is.