How could DNS become more decentralized? You already have your choice of TLDs, registrars, ISPs, and software. If that's not good enough you can host a public key under .onion.
DNS is not decentralized at all. It has a center - ICANN (organizational, legal) and the root servers (physical), which gives one party a near absolute control.
To get it, you have to register first.
What is an illegal domain squatter? Someone using your business name? Namespaces are bound to collide.. think of all the JohnSmiths who want JohnSmith.com
Namecoin is decentralized.