What Should My Cease and Desist Letter Say?

From the PDR's Decayed Daguerreotypes
Collection (Portrait of Emma Bostwick)

Dear Rich — I just stumbled across a commercial venture’s Web site that uses my photograph at the top of their main page and their about page, without permission or credit. I registered the image with the Copyright Office long ago. I don’t want to be a hard ass — I’d be happy to license the image for my regular fee or see it taken down. Do you have language you recommend for when I first email the firm? 
The communication you send to an infringer -- commonly referred to as a cease and desist letter -- should convey proof of your ownership, a summary of the rip-off, a demand that the infringer stop its activity, a proposed resolution, and request for a response within a fixed time period.
To threaten or not to threaten? Although many cease and desist letters threaten legal action, you’re probably wiser not to do so at this stage. As attorney Stephen Fishman writes in the Copyright Handbook, "The specter of imminent legal action is likely to make the other person paranoid, defensive, and unwilling to cooperate. It may also send him straight to a lawyer." (Also a letter that threatens a lawsuit may enable the infringer to justify what's known as a declaratory action.)
The right tone. The tone of the letter is up to you (and your lawyer if using one) but we recommend remaining dispassionate rather than being angry, sarcastic, or using legalese. Keep in mind that if the matter escalates, your letter could become an exhibit in a court battle. So don't say anything that you wouldn't want a judge or jury to see, as well.
Sample cease and desist letter. Here's a suggested opening salvo:

Dear Sir or Madam: I recently became aware that your website has published two of my copyrighted photographic images: "Title of photo 1" (URL for infringing material) and Title of photo 2" (URL for infringing material). I created these images in June 2005 and subsequently registered them with the U.S. Copyright Office (a digital scan of the Certificate of Registration is attached). I own all of the rights in these photographs. Because I never authorized you to reproduce these images, it appears that you have infringed my copyright.

I am hopeful that we can resolve this matter in a nonlitigious manner and am prepared to grant you a license for your past and future use based on my standard fees. If I don't receive a response within ten days of receipt of this correspondence, or if you disagree with my assessment, I will pursue my legal rights. As your attorney can advise you, I would be entitled to reasonable compensation in the form of statutory damages as provided under federal law. I look forward to speaking with you.

Ideally, cease and desist letters should be sent by some method that guarantees proof of delivery.
P.S. Dept. If the website refuses to respond or own up to the infringement, you can consider filing a DMCA notice.