The whole issue being brought forth by this posting is private rights versus public rights specifically business and job related. When you are at work what you do, say, and how you act all impact you. Without businesses being able to monitor employees they couldn't protect their rights properly and since your supposed to be a fundamentally good employee anyways you should want your business to be able to protect itself. I have worked for a huge corporation and everything I did at my workstation was monitored and stored and I was aware of this. However, it never bothered me or made me give my work a second thought because I WAS ALWAYS DOING MY JOB. The people that worry about these things are the people surfing porn 8 hours a day and getting payed for it.
I do agree that monitoring of peoples home and personal use of the internet is a bit much. Just look at some things that have happened; the teacher that had nude pics posted got fired from her job (pics were posted publicly for all to see though), the man who sent his video resume and it got e-mailed all around the big law firms for a joke and he sued (this still applies because it is an issue of privacy), and finally the man who had the facebook account and got fired for some inappropriate material displayed on his account. All these acts make you question how much of you is actually judged by work? The anwser is every part of you. These people want to know what you do in your spare time, sometimes those things speak to people's character. Bottom line sum up is when your at work you should act accordingly, when at home you should still maintain some restraint for your sakes, however if someone is attempting to blackmail or "force your hand" with this information that is illegal; and you can simply take the offensive, unless you were doing something you shouldn't have in the first place.