What happens online stays online ? Virtual punishment in the real world

As the boundaries between the real and the virtual worlds become even more blurred in the age of social networking and online fantasy games it is timely to revisit the question of whether virtual (online) activities should have consequences in the real (offline) world. Is virtual harm 'real' such that real punishment should follow, or is it more appropriate that it be punished virtually instead? However, the more fundamental question this discussion poses is whether the virtual/real binary is an excuse for state surveillance of our minds with the objective of punishing us, not for what we have done, but for what we are fantasising about.