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http://www.socialtimes.com/2008/06/do-social-network-regulations-make-sense/ -
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I think most socnet users are blissfully unaware just how vulnerable their data could be. It really is caveat emptor - users ought to familiarize themselves with at least the basic terms of use and privacy settings.
As far as regulation, I think it could be helpful. Our community is financial services focused so our members main concern is security and privacy. We allow the information to flow freely but exposing their identity is entirely their choice.
I think there is a way to protect the identity and data of the users along with allowing them to freely engage with other one, it just takes some debating. :)
Another thought, Totspot seems to be doing some interesting stuff with identity protection as well for babies/kids.