It seems to me that the divide on this question is an economic one. That is to say, if you're just starting out, or if you occupy a niche (as we folkies do), you may well agree with Knightley that it is a boon to have people copy your CDs and spread the word about your endeavor.

An established or well-known artist (one who is making substantial amounts of money from CD sales) is much more likely to view the process as "piracy".

Cheers,
Michael