There is invisible watermarking that can be done.. supposedly works very well. Only problem with that route is that there is no visible deterrent to the thief. They'll see the image and use it. The invisible watermarks are really only there to help you track your images down and enforce your rights.
Honestly, this is a hot topic here, but I feel that if someone grabs one of my images, they are no bigger than 1024 (which wouldn't even make for good desktop wallpaper nowadays) so I'm not too worried with the casual theft by Facebookers and MySpace snatchers. They're going to steal anything not bolted down anyways, so who cares. I only get concerned if Walmart or another similar entity grabs and uses my images. And then, I'd have an easy case, so it's worth going after to me. Otherwise, not so much.
Some others here feel that their downsized 175px images splattered with an obnoxious watermark in the middle of the image, protects them. More power to them, I guess.