As someone that works in the industry making software that does performs search analysis, I can tell you that this is only the first pass. Hash matching finds things quickly, but doesn't find everything as you've said. There are many, many research areas going on in frequency analysis, image analysis (skin tone searches, etc.), and others. And then there's good old-fashioned viewing of files to search.
Sadly, the software currently out there is WAY behind on the research. I count myself lucky working for a company that's starting to put some of this research to use. Still, hash matching is a very useful tool; remember, most criminals are dumb. Just take this case, where the guy gave his computer to a friend while it still had child porn on it. Often, the best thing they do to hide illicit files is to put them in strange (or hidden!) folders or change the file extension, both of which are easy to detect. Those that do realize that changing their files can hide them better generally have enough knowledge to, say, encrypt their files, which makes things extremely difficult anyway.
