Demos aren't really that bad or good. Some of them just take a snippet of a level in the final game, others just go the Colonial Marines route and make an entire segment that is never found in game. In the end though you still get a basic feel for what the game is going to be, it may not be 100% exactly like the demo (A:CM) but I still knew what some of the gameplay would be like, and in the end it was enjoyable. Personally I don't download games because I generally know what I like and have yet to buy a game at full price that I didn't enjoy. There are of course going to be the odd games out (Duke Nukem Forever, Dead Space 2, Borderlands 1) that I have spent money on and regretted, but in total these 3 games have cost me less than 1 full game. I always find that if you're unsure about a game, wait till it is cheaper, or if you live in a country that allows you to rent games like Australia, UK, or US, go out and rent the game for a day, play as much as you can, and if you enjoyed it, buy it. The only reason I bought Assassins Creed: Brotherhood was because I was bored one night and decided to give it a go.
So yeah, I guess a lack of demos could potentially increase piracy/decrease piracy, but I feel that morally you should find alternative legal ways to play a game you are curious about.