OverDrive copy protection discussion at Wired
Tame the Web and LISNews pointed out a spirited discussion of OverDrive DRM and public libraries at Wired news. The authors of the original post are shocked (shocked!) that libraries offer DRM-locked content that is limited to Windows machines. The comments are worth a read - at the time of this writing, they lean heavily to countering the authors' arguments.
The iPod incompatibility is, to me, the bigger problem than the fact the DRM exists (if it didn't, even fewer publishers would join OverDrive's catalog). But if the iPhone takes off, the situation will only get more divided, I think. Beyond that I don't want to prognosticate.