I remember this topic used to come up over and over and over again in the Graphics forum.
There really is no definite answer, and it comes down to personal preference and how much risk you're personally willing to accept.
First of all, there is NO way to prevent your image from being downloaded, watermark or not, disabling right-click or not, using Flash or not, using an "image condom" or not, it's always possible for someone who really wants your picture to get it (even if they go so far as to screenshot it).
After you accept that fact, you accept that putting a certain image up carried more benefits than risks for you, so the next question is how much risk you want to accept. And here's where there are two camps;
One bunch will say that no matter what you do, a determined enough person could both get your image and edit the watermark off, so may as well have the image look its best (by not having a watermark) for everyone else who just want to enjoy but not steal it.
Then the other bunch says that in no way, no how, do I want someone to steal my image and I'll upload it at 50% and cover it up with scan lines if I have to!
I have to tell you, I'm a little biased to the first camp. For me, and again you don't have to do this, I like putting just a modest name and website address at the bottom so that everyone can enjoy the image and at least if someone does download it for their blog or whatever, I'll get somekind of milage at least. That doesn't mean that I'm happy about people stealing it, or using without paying me, it burns me up! But it's just one of those realities you have to accept in web-publishing, I think.
The hope for me is that publishing the images benefits me more than the odd person who would steal and use it.