Back in the olden days ('96) I worked for a software company and had a lively discussion with the COO and the CEO. At this point only "select" employees could access the Internet because they were scared about wasting time.
My points to these very successful guys were:
1. Why do we care if people surf around during the day? Shouldn't their managers be focused on work done versus time spent? It is a heck of a lot easier to manage by the clock versus understanding what work should be accomplished, setting appropriate deadlines and holding people accountable. This is not the employees fault it is lazy management.
2. There is no way to know what people may learn while surfing the net, even sites like slashdot can add knowledge and therefore help the company
3. A software company employees knowledge workers, there is no clock on these types of workers. When I loose sleep overnight and finally get some rest but wake up with the answer to a problem... Should I book my time in bed to the project?
Companies need to treat professionals as professionals, manage the work and not the clock, expect the best and guess what... you will get the best.