For the second time in less than a year I've had pics stolen from my website and used as if they were free for the taking. I use a rather large watermark with the copyright symbol on all my pics so it's not like they don't see that they are my property. First time was the yearbook staff and now a student in a digital arts class has "borrowed" a pic in order to create a negative print t-shirt. What is wrong with people?
Kids don't know any better. Right-click -> save as -> free to use. They don't think about the legal stuff behind it. Especially not from a photographers point of view. Contact the school, have it dealt with. Problem solved.
It depends on how your pictures have been used and whether or not you think it's worth it to pursue. For commercial use, I've heard cases that compensation in 4-5 figures was made/settled before going to court.
Schools have been pretty strict in the past about students getting their term papers off the Internet so they should pursue image theft / copyright infringement about the same.