Ditto. Hardware dongles are evil and I will never knowingly buy any software that requires them. Having to carry around extra hardware that serves no purpose except to satisfy the paranoia of a software manufacturer is not acceptable. I feel the same way about that as I do about WMA-based music downloads—like I'm really only renting the software, and if something goes wrong with that iLok, I'll end up buying it all over again.
Where I come from, trust is mutual. If the manufacturer doesn't trust me not to give their software to other people, why should I trust -them- to provide bug fixes? When that unnecessary piece of hardware breaks, why should I trust them to allow me to relicense the software against a working one? What happens when it fails more than once?
It's a USB dongle. I've gone through enough USB flash drives to know that those designs A. break easily, and B. break your port just as easily. If I'm going to subject my USB ports to abuse, it damn well better give me useful functionality—a USB audio interface, for example—not just be there to allow some software manufacturer to have more control over what I do with their software.
And the worst thing about dongles is that even with iLok, you can only store a certain number of keys on them. Some other dongles are even worse—software-specific dongles that only hold one product's keys. Either way, if every piece of commercial audio software I have bought required a dongle, when I want to do audio editing on my laptop on the road somewhere, I would have to have a dozen or more of those things. I'd have to design a chainable, firewire-powered USB hub because otherwise I couldn't have enough of them plugged in to do anything useful. (I doubt you could even plug in two of them without a USB extension cable).
And if every piece of commercial software required a license dongle, I'd have to find a way to add at least one more USB bus to my laptop because I would exceed the maximum number of devices you can hang off of the two that are on it currently. For that reason, no one will ever be able to convince me that USB dongles are acceptable. We cannot encourage companies to use them by buying products that use them. If we do, we will end up living in the world I describe with hundreds of dongles and no practical way to use the software on the laptop.
My policy on iLok and other hardware keys is this: if they have competition, I buy the competitor's product. If they don't have competition, I've actually been known to write a GPL equivalent (or port it from another platform). Don't get me wrong, though. I'm not a GPL zealot, and I don't mind buying commercial software. I simply don't put up with abusive commercial software vendors that require me to hang a dongle of my laptop's irreplaceable USB ports. It's just not worth it.