One of my biggest issues I have with digital distribution is that often, buying from so many sources can get messy. The resulting lack of order and cohesiveness of games that you own via digital distribution often leads me to wonder: am I really paying for the game so that it is MINE, or am I merely donating a fixed amount to the developer?
Plimus, BMTMicro, Steam, Impulse, D2D, GG, GOG....so many different outlets to carry out transactions. Then of course you have torrent and warez sites too. In the past when I purchase games, I get a nice solid box, and some nice goodies inside. I get a sense of ownership. I refused to get pirated games because not only did I feel like I'm not doing justice to the developers, there wasn't a sense of pride in owning one of the greatest games in history, even if it's installed in my hard disk.
But today, digital distribution is so colorful and so varied, I almost feel a gaping hole in me when I buy the games I want. The games don't feel like they belong to me. At least when I open up my closet of games collection, when I look through them and see a game long forgotten, I think "ohh...yeah it felt like yesterday when I opened the box". With digital distribution, especially on non-account-secured platforms like Plimus and BMTMicro, things become very messy. Even games that I had fun with, I wouldn't be able to remember even having bought them before until I come across an article or a wiki on them randomly, then realising that at one point, I actually forked out $20 for them. It almost feels like pirating games all over again, with the exception that the developers actually get paid.
GOG is cool, because of the virtual shelf. However, with so many platforms emerging (D2D, Steam, GG, Impulse), it's getting increasingly hard to remember what we have on each account. In fact, this problem is compounded by the smaller account-secure platforms, like Garagegames. Hell I bought a game via Garagegames, and I totally forgot about its existence upon uninstalling it until recently when I accidentally stumbled upon an article about it.
I appreciate the technology we have today that allows us to download the games we want on the go, for a cheaper price. However, is this technology really convenient? How do you see the issue of a lack of cohesion and greater confusion in an age where it's so difficult to keep tabs on what you actually own? "Why don't we write down the games we have on a piece of paper?" you may ask. And that's where my point comes in once more: where is the sense of ownership in that?

Sorry if the whole post is in a mess. It's 4am and I'm having problems thinking clearly.
In summary,
I think digital distribution sounds good on paper. However, in practice, it's problematic because there are so many transaction sites. 10 years ago, not only was it easy to find a game to play on a boring Sunday morning by skimming through your shelf, it also felt good to invite your friends over to your house, open up your collection of games, and beam proudly as they are awe struck by the huge collection. Now, boasting rights aside, it's almost epileptic-inducing as you struggle to remember just what games you've "donated for and downloaded" before
In fact, I wouldn't even think this was that big of an issue if GOG was the sole proprietor of the rights to digital distribution.

I agree to a certain extent, and I think it would be great if somebody (bansama?) made a sort of "global virtual shelf." There'd need to be a few changes on the distributors' end for this to work, since I don't believe they all make users' game collections publically visible, but it should be doable.
Just don't require the user to enter all their games manually. Or, if it turns out it absolutely has to be done this way, streamline the process as much as possible.

I solved that through the use of software.
Instead of browsing the closet, i browse my collection where i can see all the games i have. Everything is in there, retail, steam, gog, d2d, etc.
As a plus i can also manage all the related material for each game like soundtracks. vids, pics, mods, etc.
I like the idea of online collections but they don't really work for me cause i like to have lots of latitude customization wise.

I disagree completely. Digital distribution is fantastic: my desk is no longer being cluttered by an ever-increasing pile of boxes, disks and manuals... all of my games are easily accessible from a single location (the Windows Start menu - what a concept!) and I don't need to hunt for a disk or crack to run them... I can buy games any time I want and I don't even need to get dressed to do it... this is all the definition of convenience.
Keeping track of what I have and whether it is installed is really a non-issue for me. Just as I (tried to) keep my disks and manuals organized, keeping digital downloads organized is a simple process, in fact, far simpler than it was with physical media... a single directory on my external HDD with sub-directories for each downloaded install file and Steam backups, I never end up losing anything (unlike physical media). Occasionally I do miss being able to reference a physical manual while in-game, but that is a rarity.
As for sense of ownership, well, we never actually owned any of the physical media games of the past, so that's all it was, just a "sense", not reality. What is important to me is the games themselves. Why does a false sense of ownership matter at all when all I really want to do is play the game?

I do miss having game manuals, but it seems like they don't put much effort into those anymore anyway.
Plus downloaded games are hurricane proof and my shelves are not.

This is what i use. It does all that and lots more.
Larger collections are a nightmare to manage...

If I can't bludgeon someone to death with it, it's not a real manual.

I agree to a certain extent, and I think it would be great if somebody (bansama?) made a sort of "global virtual shelf." There'd need to be a few changes on the distributors' end for this to work, since I don't believe they all make users' game collections publically visible, but it should be doable.
I have something like that in the works yes. But you're right, importing lists is going to be tricky without having access to those lists -- but I do believe I can come up with something that would ease the pain of that. I can't give any ETAs though right now.
As to the actual topic in hand, I'll come back and respond a little later (when I've had time to read it properly (I've only just woke up and the kids are bugging me to go out =/)

As a child of the 90s, I absolutely love digital distribution. Getting games from Steam is like having a giant vault filled with all your games, and you can access any one of them with a click of the mouse. It reminds me of my rich neighbor who had this 500 CD player, and I got my first job programming in every album he owned into the device. Only this takes care of it all for you, so it's even better.

I agree with the OP to an extent, but I think it depends on the specifics of the digital distribution platforms. If I buy a downloaded game I typically prefer those that aren't tied to a platform or service (e.g. what we get from GOG). That way I can simply keep a (backed up) folder with all of the installers and easily take stock of what I have without having to go wade through various platforms and redownload anything (or deal with each platform's backup method of choice). Basically, if I have to wipe my hard drive I only want to have to deal with a single physical shelf and a single folder of installers when looking to reinstall games that I have; dealing with anything in addition to this is an added inconvenience.

I also agree partially with the OP, though I have no trouble remembering what I've paid for.
While having many sites is good for variety and competition, I find it too much to deal with and stick with two of them. There are others out there that have titles I may be interested in, but I don't want to deal with yet-another-dd-service.

I definately prefer my boxed games for the moment, I'm waiting for a system which works more like GOG for new games before I jump into a download system.
Pricing problems, regionality, DRM, all these things turn me off. My biggest worry is that Steam will get such a lead on the market it will attain a near-monopoly, which would be very bad. It already annoys me enough that there are games that require steam as a DRM measure.

Having real, boxed copies is much better than just having some files on your computer, especially when those files are linked to some account or other that can be removed or lost, and might not be available if your net stops working.
If I can buy a game in a box, I will do so. I will even go and buy games that are released in boxes after having purchased digital copies before they were available in boxes. It means I own something (depending slightly on the DRM used, but unlike my Steam-games, I can do whatever I want with most of my boxed copies - so I own them, unlike my Steam-games).
Some people don't care about this, and that's fine. They'll probably welcome the whole cloud computing thing with open arms, for instance. But I will continue to buy boxed games for as long as it is possible.