Demigod appears to have been a pirates' cove at launch, as Stardock CEO Brad Wardell explained on his blog a couple days ago: Out of the 120,000 connections on launch day, only 18,000 were legitimate customers (that's not sales, merely "concurrent users"). Obviously, this situation put quite a strain on the servers. He explained that Stardock stress tested for 50,000 players at peak times and wasn't expecting to hit those numbers for weeks.
A letter from Stardock this morning notes that "most" launch day issues were resolved yesterday afternoon. A "doppleganger" of the network was created, along with an update for legitimate players, which now directs them to the clean servers. It's a pretty nasty situation for Stardock, which has actually put faith in gamers by not placing copy protection on its games.