I actually have SEE ID written on the back of all my credit and debit cards. I've had my wallet stolen and my identity stolen before. So I have no problem with someone asking me for my ID.
I voted its never wrong for them to ask to see ID. I think they are doing you a favor in trying to verify and protect your credit card info.
I just had another fraudulent hosting order a couple days ago. The person ordering the service was saying they were from Texas but using a credit card from Minnesota. I replied asking them to explain the relationship to the card owner. I was not expecting a reply but they said "father in law". I found the card owner in the white pages and called him directly. He had no idea who this person was.
The issue the guy had was that he thought it was a violation of privacy. He was afraid that someone could steal his identity by showing his ID with his credit card.
And, the merchant agreement from MasterCard and Visa both say that the merchant is not allowed to require ID as a condition for accepting credit cards for purchase.