@Ed - I fully understand your concerns. When I was managing a departmental network for a university, I often spent hours cleaning up after the faculty members' kids and their downloads. I also spent hours cleaning up after the students who turned my stations into BitTorrent servers for all kinds of copyrighted material. There has to be security precautions in place.
But I disagree with your total ban of social networking sites. They are valuable resources and can increase productivity in the workplace. There are products that allow access to SNS while providing fine-grained security and an audit trail for employee activities. http://compass.socialware.com/