Most employers have a policy in their Employee Handbook (as they should), limiting the use of internet to 'business use only'). Many employers also have 'firewalls' to ensure appropriate use of the internet and to mitigate the intrusions of viruses.
Myspace and Facebook are clearly social sites and - in my opinion - should not be used during worktime.
But what about linkedin.com? This is a business networking site which toes the line between social ("look up old classmates") and networking for professional opportunities.
The answer? It's really up to the manager. While professional networking can increase visibility and potential sales, a lack of productivity may result as employees spend too much time 'networking' and not enough time producing.
My recommendation is to monitor each employee's productivity individually. If productivity is falling, then consequences should result.
And remember - a lot of linkedin users are on the site to network for another job...
An article from Eric J. Sinrod via cnet.com adds some more perspective.