it went all downhill after MM2.

I've said this before and I'll say it again here. Might & Magic needs to stay dead as an RPG since I can't honestly see a significant demand. If M&M was still popular, mods would be played more often and there would be more activity on GoG's M&M forum.

Dark Messiah was awesome, so long as you had the Steam version (because it worked) and could overlook the glaringly obvious plot twist.
As for Ubisoft and Might & Magic; they could produce a truly authentic M&M game (whatever that is now) and it would still soil the memories of the classics simply through the inclusion of Ubitarded DRM.

How was the Steam version different?

Huh? I have (had?) retail version and it worked perfectly without any clitches or crashes as far as I can remember. My problem with it was that all the situations game presented felt atrificial (stuff was placed there only for player to kill something with) and it featured most annoying 'good' companion (forgot her name). Should really have chosen the daemon girl instead but could not be arsed to play the game again just to see that ending (endings were also disapointing and short. I expected some epic sinematics but was offered couple dozen second narration!). It felt developers toy/experiment rather than a game.

This. DM was like a tunnel. Yes, you had a few choices how to play, but it wasn't that special. If only the MP wasn't so broken, I quite liked it.

it never pretended to be an open rpg. it's like buying doom and complaining about the storyline.

Still it was supposed to be action RPG of sorts not a "tutorial to 101 ways to kill an orc". And linear RPG does not mean player has to go thru tunnel as klaymen above described it, it just means you will end up at same major plot point(s) no matter what path you take. They did not even bother to try to disguise it as anything other than heavily scripted tunnel run.

I've never gotten particularly worked up over the various Might and Magic spinoffs. The franchise has seen a fair bit of weird experimentation, but those experiments have always been distinct from the original series, and from the new flagship, Heroes. When you've got such a venerable franchise with lore that spans a galaxy, why not try different things with it?
That said, the lore of the Might and Magic universe is fairly distinctive. If you're not going to make use of it, borrowing the name seems a little silly. Have any of the science fiction underpinnings of the original series appeared in the spinoff games? I've only played Dark Messiah and a couple of the Heroes games, but I don't recall seeing any trace of the ancients.
Wikipedia tells me that Ubisoft essentially rebooted the entire franchise, creating a new universe for it with no connection to the original backstory. Is that the case? If so... that's pretty weak.

I heard a lot of complaints about the disc version not working properly. I don't know if that's because of DRM or because Ubisoft gave the Steam version a patch that they never bothered to give the disc version.
As for the item placement, yeah, villagers did have an odd fixation with decorating their places with spikes, didn't they?

Wikipedia is right. Ubi created a new universe for the (Ho)M&M games.

For the record, I actually really like how Ubi has handled the new M&M universe.
The old one was (sort of) at a point where it could easily be considered over.
So they made a new one, and made a set of games that intertwine in ways that are only comparable to the recent Tom Clancy games (also Ubi :p). The events of the HoMM lead to Dark Messiah. I think even the DS game is involved.
Very fun.

That's cool. I'm not familiar with the Tom Clancy games, but Might & Magic has a history of connecting standalone games into an overarching story. Maybe Ubisoft has bigger plans for the franchise than just "create some fantasy worlds."
Unfortunately, I'm really only a fan of the original series, and I'd be surprised if we see another Might & Magic game in that vein.

Yes, Ubisoft started a new Might and Magic story involving dragons, and real demons instead of aliens.
The old one was at a point where it easily could have continued, world that the last few games took place on was destroyed and Might and Magic IX and Heroes IV took place on the new world.
The events of HoMM V leads to Dark Messiah, and Clash of Heroes is a prequel.
The old Might and Magic games are still great, and the story was good, but I must admit Ubisoft's games are good too, granted they have nothing to do with the old ones other than the name, and somewhat the game-play in Heroes. But also remember, NWC made quite a few spin-off's when they were with 3DO.

Pretty much. That is why I don't get why everyone is freaking out. Well, I do, but that is just because they want something to whine about.
Same thing with the other thread where people freaked out because Ultima was getting a strategy game. Worked for M&M :p