I think in general privacy laws and government regulation of privacy is a good thing. The problem with self-regulation of privacy is that personal information is a lucrative commodity. It is hard to get companies to do what's right when most people don't even realize how much information they are giving up or what their rights are. I think well crafted legislation can provide a good framework for companies to better their privacy policies as well as provide redress for consumers who are adversely affected by bad policies. Good laws also provide a way for privacy advocacy groups to benchmark companies by providing a baseline as well as providing standards to hold companies to.

The key here will be that the laws need to be broad enough to deal with the rapidly changing business methods as well as provide room for companies to try different methods of achieving the results. At some point you can push companies far enough that they will then try to advertise on how great their privacy is versus some other company, so it's good to set the bar and allow companies to rise above it as well as just meeting it.