Posting anon since I probably shouldn't be this specific, but the market for DS software has totally collapsed in Europe, particularly in Spain and Italy, where you sell virtually nothing. Titles in Europe are moving literally 10% of of what they do in NA. Many, if not most, major publishers are currently abandoning the DS completely, since the loss of Europe knocks out a huge chunk of their projected ROI.
Now, I'm in the radical camp that actually reads scientific studies and approaches new phenomena with an eye to determine how they work, rather than shut them down, so I think a lot of the focus on piracy as theft is misplaced. An R40, or similar "piracy" device, also makes your DS dramatically more useful since you can carry around a large library of titles at once. Even better for kids, obviously a key demographic, it prevents the tiny cartridges getting lost or destroyed. When they came out, probably 50% of the people I knew immediately got them, and many for their kids as well. (Note that this is a very skewed sample: I work at a game development company, so we're all pretty hardcore, often each of our kids has their own DS, things like that.) Many of these people started off determined not to pirate and just use it for the convenience. (again, skewed sample - we're voracious, hardcore gamers, but we make them for a living, so we take piracy a little more seriously. Doesn't mean we don't do it, but it often does mean we try not to.) Then they were just downloading the titles to try them out. And so on.
I think piracy is usually as much about convenience as free product. It's just like prohibition: if you try to prevent behavior that everyone sees as reasonable, people will ignore those rules and proceed to behavior they wouldn't have considered reasonable before. The best way to fight piracy on the DS is to give us an easy way to store games on the device digitally. You'll probably want to pair this with a digital distribution scheme, which is fine, and gives you a nice place to ensure that we get free demos of all games. Yes, this will mean that people won't buy the crappy games, which leads to lower licensing revenues for Nintendo, but the DS badly needs to have the wheat cut from the chaff to restore confidence in the platform.
These are just two examples, and more than this is needed to defeat the piracy problem, but the key is the strategy. Don't focus on preventing piracy, focus on your products delivering the real value that your customers want better than the pirates can. You've got economies of scale all over them, and if you don't know your own products and consumers better than the pirates do, you don't deserve either.
Massive piracy on DS ensures fewer risky, expensive titles like The World Ends With You and more of the easy, safe, "40 different versions of Imagine Babysitter and Pony Lover DS". The best way to fix the piracy problem is to give people what they want, which isn't really games for free.