The elephant in the room is mobile data devices, because employers cannot do a thing about them on a technical level. That means that employees' time management is a MANAGEMENT issue...if your staff isn't turning in the expected level of performance, what difference does it make where they're frittering away their time?

Second, the points about using SM for knowledge gathering and opportunities are quite valid. If you're in a business where you see no opportunity for growth or benefit from SM, then you're probably lacking in imagination for starters, but sure, put a clamp on it. However, if you're in one where you can identify ways to use SM tools for public communication, marketing, outreach, or other opportunities, then doesn't it make sense to have your employees be conversant in SM in a way that's acceptable to your organization? Don't you want to have a policy in place that guides your staff in business use of SM, that sets standards for communication, and that enables them to be good stewards and advocates for your organization?

Better to understand and manage it than to forbid it, in my opinion.