Android Market apps are mostly super cheap. Who can't afford $1 on a game they'll play for a few days non-stop? Or a few bucks on a ROM management app? Prices for most paid apps are so low that I imagine that the largest barrier to entry is not price, but the effort required to set up one or more credit cards. My hypothesis, for that reason, is that a large portion of the piracy comes from the age 15-20 crowd who have fancy phones and lots of free time to figure out piracy options, but no credit card(s).
Google can greatly reduce this kind of piracy by working out pricing deals with the carriers to allow charges to appear on phone bills. How else would the ringtone industry thrive as it has? Verizon certainly doesn't offer a direct-bill Android Market option. Maybe this is already the case on other carriers? How does piracy compare in those cases?
Another annoyance of the Market is currency conversion. I've bought apps for sale in both Yen and Euros, and for those purchases I had to set up a Visa card since my AMEX didn't support foreign purchases (on the Market, at least). Most users don't want to deal with that kind of crap ... again, piracy is easier. Can't Google Checkout handle currency conversion on the developer's end without hassling end-users?