Photographic Content and Watermarks

I'm interested in hearing everyone's opinion on the watermarking of photos, especially photos used by affiliates. I have noticed that there is a wide range of practice in this area by producers of content.

Some questions I have are:
1) Do photos without a producer watermark cause problems for any of the producers in terms of content theft?
2) How do affiliates feel about the use of watermarks, helpful, not helpful?
3) Do any of the sponsors have specific agreements with affiliates in terms of keeping attribution on each and every photo?

Thanks!

All of our content in our affiliate area and members area is watermarked, but we do sometimes provide nonwatermarked content for sponsors, on request, if they have a specific need (an unbranded freesite or something)