The more people watch it through legal means, the more advertising dollars they will get, which results in more anime. This is especially good as a lot of anime doesn't get interesting until a couple of seasons in, and watching only the first episode online doesn't tell you much about it.
This can be good or bad.
My wife reads fanfics and is always saying stuff like, "I wish this person would hurry and update!" I tell her that the person updating is only human; they have to come up with the content, put it into a favorable context for readers to enjoy, and that takes time. The author may do the writing out of love for the story or just popularity.
It's similar with this. If a company makes more money, it doesn't necessarily mean that they'll come out with more anime to continue their series or make new ones. I think more anime would depend on what the people drawing the anime and creating storyboards are influenced by, whether it's money, popularity, or if THEY think it's good. Getting paid more and having more resources always helps, though ^^ But it doesn't mean high quality anime will be busted out. Maybe the opposite, in fact. Wanting more anime might result in more mediocre shows coming out in a shorter amount of time.
By the way, I don't support illegal watching or downloading of any anime. ... Um ... Anime is alright, but I like sci-fi better.