I'm certain you're right, thesnark, that by far most downloaded material is obtained illegally. However, sometimes there are fair uses which should trump whether it's actually illegal or not. For instance, converting an album you own to MP3s can be slow with some RISC OS machines, so is it wrong to download the album off the net? What if someone stole a DVD of a movie you once had, is it wrong to download it?
Also, people *do* use P2P software, particularly bittorrent-based ones, to download lots of legal software, especially Linux distributions, game updates and other things made freely available but where the author doesn't want to fork out loadsamoney on bandwidth.
I believe it is more reasonable for the end users to face the consequences than the people that produce the software enabling infringement to occur. This is what the case was really about - now the developers of software *can* be held liable. Think along the lines of a VCR - although they were definitely being used, to some extent, to result in copyright infringement, there were significant fair uses of them.
jess: You're probably right in saying that - it should perhaps be made more obvious. I do mention on the website that it shouldn't be used to share stuff illegally, but I wonder to what extent I'm 'required' to implement DRM restrictions in order to be legally in the right. Should I force any file with a .mp3 to be downloaded or uploaded for instance? There is no one way that would work (I'm certainly *not* planning on putting in DRM by the way).