It's great that you're actually having this discussion -- something I'm
sure a lot of creators never do.

In my opinion, book piracy is a pretty hard thing to do "properly".
Sure, if an un-DRM'd PDF is available, it's easy to copy and share the
text and images that make up the book, but it's arguable if that copy
is really a book, or just a wrapper containing the IP that would
normally be realized on paper. It's not the same product -- as opposed
to music or videos, which are (generally) indistinguishable whether
purchased on CD/DVD or downloaded via The Pirate Bay. If you actually
wanted to go to the lengths of printing out a PDF of a book and
binding it in some reasonable fashion, I suspect it would quickly
become more expensive (time + materials) than purchasing the book
itself.

Given this point of view, I would argue that if someone were to
download a PDF of the book, chances are they would only read enough of
it to determine if there is value in purchasing the (MUCH easier to
use) paper copy or not. If they don't find the book valuable based on
the PDF, the download isn't a lost sale as they wouldn't have
purchased it anyway.

I can anticipate two problems with this way of thinking:

1. People who read entire book on computer and find it valuable/satisfying:
I can't foresee this happening very often -- it's HARD to read great
amounts continuously on a computer (or at least I find it to be so).
This would be a lost sale, but I can't honestly foresee it occurring
that often, and it would likely become less and less feasible as the
page count increases.

2. People using the book as a reference:
I see this as being a bigger problem. If someone doesn't want to read
your whole book but finds certain sections valuable as a reference,
they're likely to hold onto the PDF and search it or jump to those
particular sections. It's tough to say if this is a lost sale or not,
and this is perhaps the only case where I could see a DRM'd PDF ebook
doing more good than harm. The purchaser is effectively not saddled
with a whole stack of paper when all they wanted is a chapter, and
you/your publisher is compensated for the use of that chapter. For a
non-DRM alternative, this would perhaps be a good situation for a "pay
what you think is appropriate" arrangement, similar to Radiohead's In
Rainbows album distribution.

Maybe some market research is required to see if people find DRM'd PDF
ebooks valuable/satisfying?

Anyway, given that a non-DRM'd ebook is not an option, I'm not sure
what I would do. The DRM'd book would allow for additional sales AND
could be very valuable for certain users (people who only want part of
it, and/or want to search it). But, it could also be frustrating for
those users (closed-source reader, etc.), reduce physical book sales
as Russell mentioned, and involves the privacy issues of the embedded
email address.

If you decide not to go with the ebook, you have a great opportunity
to include a statement explaining to your publisher why you made that
decision. This option could allow you to stick to your principles
while making it clear to the publisher why you are doing so, which
could potentially lead to a change in their policies in future.