I do hand out the cups for examination and it's not even just before the trick, I actually do a coin routine in between so some folks are holding cups for a good couple of minutes.
I mostly do this for transitional purposes and fewer chances to leave etc.

I agree with Bill, especially on the street, ESPECIALLY on Freemont Street in Las Vegas.  The cups are not the only effect I do.  When it comes to the cups I only ask people to point to a cup, or name a cup.  I have other effects that I use for audience participation, like the sponge balls or a card stab.(which is done with a butter knife to keep it safe).
I use a custome made wand, and a nice set of cups, the last thing I need is a drunk tourist doing something to my props.  Which is another reason to maintain controll.  In Vegas there are bars on the streets and people can drink on the streets.  In fact, I offten perform in front of bars.  If you've ever seen the giant drinks they sell the tourists you would understand the need to be careful, and maintain controll.
Good Luck!
Wes