ForeignPolicy.com has an interesting article about Cyxymu the first digital refugee . DDOS attacks against LiveJournal and Twitter have been forcing him to use other services to spread his message.
Botnets (large groups of computers running “trojan horse” software that are under the control of a single hostile party)  have been around for a while. At the moment a large portion of the spam that is sent comes from botnets. So everyone would benefit in a small way if they were greatly reduced in scope.
But until recently botnets have been mostly an annoyance, sure they were well known to be able to put small companies offline and estimates of the potential capacity of the larger botnets to slow the net access for entire countries (such as Australia) have been circulating for a while. But they haven’t seemed to be really harmful.
When a DDOS  can be used to force major Internet services such as LiveJournal to cancel the accounts of members as a measure of self-protection then it really changes the industry. Firstly it decreases the value of LiveJournal, an advantage of the big blog servers is that they can be used to get a message out even when other services are being attacked, LiveJournal apparently isn’t big enough to perform that task. So this effectively puts Google in a market leading position (it seems inconceivable that anyone could DDOS Google). I don’t think that this is a good thing for ISPs, so they seem to have a vested interest in correcting this problem.
Censorship of political comments seems to be against the best interests of any democratic government. So there seems to be a strong case for government action.
The Australian government is currently wasting huge amounts of tax-payer money on trying to filter net access with varying claims of preventing children from accidentally seeing porn mixed in with claims about preventing the distribution of child porn. Of course if they want to stop the distribution of child porn then they want to stop the trojans (for example in the UK Julian Green was found not-guilty of child-porn charges due to the evidence suggesting that a trojan was responsible for the downloads in question  and in the US a 16yo boy was charged with distributing child-porn because of a trojan  – there are many other examples of this).
I believe that legislation to deal with these problems is long overdue. I think that fines need to be levied against either users who have infected PCs on the net or the ISPs that serve them. It’s not difficult to discover machines that are in a botnet, it will cost some money but the cost will be less than the penalty that is levied for a minor infraction of the road laws so it should be good for the government general revenue.
In the short-term this might be considered to be bad for ISPs (some current customers will drop off the Internet). But in the long term I think that it will be good for their business. In the long term improving the quality of the Internet experience can only result in more people using the net and the people who currently use it spending more time (and therefore money) doing so.