Demos are fine for new games. I can't think it's useful for GOG to host the old ass demos that exist for the games here (due to maintenance), but on XBLA the demo is extremely representative of the game you'll be getting. XBox Indie is the actual game, with a time limit slapped on.
Steam demos I've had good and bad luck with, I do like demos for indies, especially those with oddball seeming gameplay. Krater probably needed a demo, for example. I couldn't figure out what it was before I'd actually bought it. Something like Spec Ops: The Line isn't going to benefit all that much from a demo, I would think (though I think there was an XBox 360 demo for it, at the very least).
So I guess it depends on the game, the more you need to demonstrate vastly different mechanics the more useful it becomes. If you have a platform, such as XBLA, that practically hands you the demo for free, there's no reason to not make one. As for other platforms, hmm, whatever.
Some people will pirate to try with or without demos, it really shouldn't be a factor, others will only want a demo and will not pirate to try, don't rely on community word of mouth from piracy and gaming media if you really need to showcase your game. For every game that gets massive praise 20 or more get a passing mention regardless of quality.