I basically take the latter approach. I'm not in Photography for the money. I do all of my photography for fun. I struggled with web piracy when I first started posting, but I got over it. Now I don't worry about it. I've had all kinds of strange requests for my pictures (stuff like a scrapbooking book, a PAC campaign, a British Dragon Boat race). I've seen my photos pirated and used on news shows and on other people's websites. It doesn't cost me anything and it doesn't really bother me. I have bunches of people on the scrapbook forum here that use my pictures and give me very nice thank yous. It's all good.
I have been warned that people in Brazil may be copying pictures of my family and using them for some family role playing game and that I should be very worried and disturbed about it. Frankly, I don't care if they are doing it.
I like sharing my pictures on the web. I'm not going to stop doing that just because some people infringe on my copyrights. I respect that others have a different view than my own, but I have no advice to offer them.