Is the full text of the C&D letter available anywhere? I am not fully understanding what Atari's issue is. I read somewhere that it was because "atari" was contained in the domain name in it's entirety. Is that what the issue is?
There is a lot of misinformation in this thread about IP law.
If I owned atari2600.org and they wanted it and I didn't care that much about it, then I would let Atari pay the $1400 filing fee and get it through the UDRP process. Let them pay for it that way if they don't want to pay me for it. IF Atari was upset about the domain name, then having a parked page up as it is in it's current form is probably the worst thing that one could do. Atari could argue that the domain name is being used in bad faith as there are commercial links.
Regarding hosts and DMCA. Forget about the DMCA and takedown notice process in this case. It appears that Atari is concerned about the name "Atari" being used in a domain name. The "DMCA takedown notice" process is used when a violation of a copyrighted work appears on a website. This doesn't appear to be the case.
Regarding ignoring the notice and saying that one never got it. What is going to happen is if Atari wants the domain bad enough they will go through the UDRP process and whoever is the admin contact for the domain will get notified that a dispute is in process. This is why ICANN requires the domain holder to keep up to date information on file.
Does Atari have a right to the domain name? Tough call. In UDRP disputes the challenger wins most of the time. You don't even need to have a trademark to take a domain name. Atari's trademark on Atari2600 expired July 24, 1995. Tough call what the panel would rule. (A court would most likely rule against Atari.)
Here is a nice search tool to see the status of domain disputes -
(To answer someone's question, domain names do not go to parked pages during a dispute. So it appears that the owner parked the page with the registar.)
If one wants to search trademaks here is where to do that -
(top right hand side link.)
Now. If Atari sent me that letter I would respond saying that I do not believe that they have a valid right to the domain name and furthermore state that the domain name was never used in bad faith.
Now, if it's an issue about the content that was on the site, ignore everything that I just said.