We've used a hard activation process previously, and only around 40% - 50% of people who signed up actually activated. Think about that ... over half of our users who spent the time getting to know the product enough to sign up didn't even get to use the site properly.

Now that I think about it, I think it's crazy... and I'm not using any activation on my new site. If they got their email wrong during sign-up (an occurence a lot more rare than 50%), they can just change it or sign up again.