Hi Commercee:
To answer your question: I work with affiliates that do both methods:

For those who drive traffic to their pages, I provide them with a datafeed, coupons, etc. I know that FastFloors.com products are competing against other flooring products and I try to provide things that will ensure me a sale :)

For those affiliate who drive traffic directly to FastFloors.com using their affiliate link, I try to coordinate efforts: I stay away from "bottom feeders" like 7search, Miva, etc and provide them with an keyword list which they can expand.

I do not condemn affiliates for bidding on my same keywords or the company name: I rather have a friendly link to my client site and a competitor...

Choosing either method is up to you....