the word "Warez" kinda means pirated software... so i guess a yes to that part...
But as far as the software used goes it isn't illegal at all, the content that is shared is what comes under copyright.
As was said above, Bit Torrent and Limewire are different networks of P2P users, although the newest versions of Limewire support connecting to the Bit Torrent network.
The question you asked tho is one major concern with those largeish American Anti-Piracy Groups that are all over web news (well they where, died a bit in the last month or two but they will be back), the ones that going after all the Bit-Torrent providers and are trying to do location traces on Limewire sharers, they are killing a technology that has nothing to do with what is being shared on it, for example there are a good many very legal Torrent providers around that are still catching fire from these groups.
In fact Bit Torrent is great for spreading content that is created and sold over the net, or that people give away for free (read Open Source and free meida), that would other wise never get distributed as the creators can't afford distribution.
More then a few tech groups; peer guardian, Slashdot and Wired to name just a few, have all had articles up over the last 6 to 8 months talking about the very real concern that these piracy groups that are just trying to 'help' us could easily do to next generation internet development if they are able to pass some of the crap they are trying too.
and with that...
but seriously go check out the articles, they are a good read to boot