The problem with regulation is usually not what it is suppose to stop, but how it is implemented and the interpretation of the "Bad Things". It is so easy to get wrong, though it often takes a government with serious amounts of incompedence (like Australia's) to get it so bad.
Total lack of regulation would be a bad thing on The Internet. I'd say most people would prefer some form of regulation. However it seems bizzare that there is this need to have augmented rules just for The Internet.
Take the old newpaper's favourite, child porno. Most people say, quite correctly, yes it is evil, it should go away, the wierdos that have it should be locked up. But shouldn't the wierdos be locked up if they have it on a website, a set of videos in the cupboard or even a book of photographs. Surely most countries have some legislation already stating this is illegal in general? What do Internet specific laws give that you already don't have?
Ridiculous laws, such as those in Australia, that don't work are worse than no laws. People get a false sense of security and lower their guard thinking all evil of a specific type has largely gone. Some bad guys know the laws don't work, or can be easily side-stepped and now they have an advantage.
A far more sensible way is for governments to essentially say what is illegal in real life is illegal on the internet. There would need to be some changes made, most likely around the juristiction area (where was the crime committed) and of course similar legislation to a phone tap (which already happens in Australia).
That way the law is a lot clearer; you couldn't do that in your house so you cannot do it on the internet. It also means the law is fairer, with the same punishment for the same crime, as a lawbreaker is charged in the same way.
Where's a policeman when you need one to blame the World Wide Web?