I know it's not the popular stance here, but I've got to say I side with Levi's on this one. Perhaps their tactics are a bit aggressive, but I really think they're in the right here. They have a valid trademark that they should be, and are, entitled to protect. This has nothing to do with the quality of their product or design.
I would venture a guess that if this situation were reversed (i.e. if a small independent company that made jeans that all the denimheads liked sued Levi's for trademark infringement), everyone here who is criticizing Levi's would be supportive of the small company's action against the "evil corporate giant."