I buy all my CDs as the genuine article. I might buy most of them as second-hand items, but at least I'm buying them and helping to keep my local (not a big-box) record shop in business. Not everything turns up as used and I'll sometimes have to pay for a new copy, but at least it's brand new and should last a good while, so I don't consider that to be evil.
Once I get home I rip them into glorious, lossless FLAC, burn a copy to take with me or play in the stereo, and keep the originals in their cases. That way I get an un-degraded digital copy, the original source, plus all the liner notes and album art. I can't afford to replace the CDs that get dinged up anymore.
If I want something but don't feel like buying the whole album (it happens on occasion), I'll fire up the Amazon downloader and get legitimate, high quality, DRM-free MP3s at a reasonable price. Apple may have the majority share in online music services, but I'm supporting the competition who went about things the right way from the start (they even have a Linux client for their downloads).
For discovering new music I hadn't heard before, Pandora.com is excellent. If it weren't for them, I wouldn't be buying or having other gift me any of the music I'm getting this holiday season. Just make sure to turn off your ad-blocker for that site and help keep them afloat in the face of rising royalty costs. Seems the RIAA likes to shoot themselves in the foot and do everything they can to keep people from finding new music to buy.