Haha!
What a long thread! At any rate, here is what we usually do.
For small amounts we have it in email. For large amounts, most of our clients give us a contract to sign and we return them to our clients by mail. Yes, even though it is costly.
Another thing we do is we had our design services and hosting services prepaid. We give a 30-day full-refund guarantee. No questions asked. That way, when a client complain, we simply issue a refund if it cannot be resolved.
These design contract thing is all a matter of whether you trust your client or not. And the only way to get business going is to take a calculated risk. Yes, eventhough it is hard, sometimes you just have to give your trust first.
Yes, digital signatures may work. But, then, as has been said, it is easy to battle your way if you have the printed copies with signatures.
Take care everyone.
Now, maybe everyone can sleep to it.