speaking for myself:
1. Shows my friends what I'm playing. This leads often to impromptu multiplayer in a diverse social group that never did so before. Fire up world of goo then get a couple of messages from friends who were 'away' a minute ago to ask "lets kill zombies."
2. keeps everything mostly up to date. Patches usually roll out in hours of their release and are automatically applied.
3. Steam Cloud. Settings, cd keys, savegames - all stored between my laptop and desktop without any effort.
4. Goddamn easy to buy.
Harry pretty much answered this for me: also, the downsides of Steam (them being in control, the DRM, the possibility of losing the account without much chance recourse) are balanced by the plusses that Harry enumerated, as well as the smaller cognitive load I have to endure by having all my games in just one place (granted, I have a Battle.net account with a ton of games as well…). I really don't want to have to worry about more than one account, more than one set of receipts, more than one place to update and launch and sap my RAM: I just want to game, and not to worry.
I think it's a similar reason that Apple's App Store is doing so well: I pay for convenience.
It's come to the point that I just don't buy games unless they're on Steam. I own most of these games already (I got Machinarium on another sale), but I hate having to save their .zips because my games will be lost otherwise.
Machinarium, for example, has cluttered my desktop for months now because I have no way of getting it back if I delete it, and I have no "games" folder I can move it to. With Steam, I could just delete it and redownload whenever.
