I put a small watermark on most photos I post on line, but nothing intrusive on the image. I, too, hate those huge watermarks that some photogs place across the middle of an image. But I don't mind having something smaller and in the corner of a photo, more as a 'signature' of sorts. My favorite mark is to just put a little bit of text at the bottom right corner of my image with my name, the year, and that cool little © symbol ;-). It can hopefully be enough to discourage casual image downloaders from spreading the image or using it for their own media by reminding them that it's copyrighted (as all photos automatically are, regardless of whether you mark them or not*). Unfortunately though, there's still no way to prevent a determined user from copying your photo except for putting a hideous watermark or making the image teensy tiny.
If you want to see some of my watermarked images, feel free click the links in my signature </shameless plug> ;-)
*At least according to US law.