There is no easy answer to this, however, it's not about setting up Net Nanny and walking off...
I believe it's more about famililes discussing and developing values and ethics with their children, and giving them enough information (deciding how much, is about family communication) to make informed decisions and choices and consider their own safety.
In many cases children are more net savvy than their parents, so it's important they are made aware of the dangers, their vulnerability and a plan of action if they feel unsafe. Children who choose to commodize themselves on the internet are the victims of a failure in familial responsibilities, not the internet.
Parental censorship is one thing, but I am opposed to ANY form of government censorship or commercial interests' monitoring of the internet.