Watermarks that sit on the centre of an image are horrible. Worse is when the photographer tries to make some kind of artistic statement with the watermark, by using loud colours or some horrible italic scripty font. That's ruining an image.
Personally I use watermarks on my images because lots get remote linked (as I've said before, this is down to their subject matter, not because they're technically brilliant photos!!), and for me it's advertising in return for the lost WSP bandwidth. It means if someone likes an image, they can come and see it, and others, in their proper context.
In view of my first point here, my watermarks are size 8 Arial, tucked away in the bottom right hand corner. Discreet, and I like to think, quite neat and tidy.
Theft I'm not bothered about. Newspapers will and have, in my case, taken images, cut off the watermark and printed them. The solution for me was to invoice and receive payment. So if someone wants to do this, fine, do it. It's sales after-all, so I don't care. This is why I'm not into all this fretting about including copyright details in EXIF or any of that. People are welcome to swipe my images, providing they're prepared for an invoice.