Some monitoring in business environments is not unheard of. But what do you say to management types that want to be able to see everything? One member finds himself fielding a tall order.
IMO keyloggers are never a good idea. Better talk them out of it. As nihil says, use the network. Setup proxy servers, IDS and a good firewall policy. Turn up auditing on windows clients. If done properly you can pretty much see everything without the need for something as "invasive" as a keylogger.
Don't loose sight of the privacy laws too. Some of this may even be against the law.
DjM suggests giving policies a chance to work first.
Sometimes there just isn't a technical solution to a management problem. Define your policy clearly on what is considered appropriate use of corporate resources (yes computers are corporate resources they are not the employees personal toys) and empower the managers and supervisors with the authority to enforce the policy. Like Nihil said, after the first few are fired for violation of the policy, the rest will quickly fall in line.
Has the tide turned? Depends on whom you ask. But with any stats concerning the security space, it's always wise to cast an analytical eye.
Sure, it still costs to clean up a corporate or institutional network, but I think that the decline of almost 25% in reported costs is partly explained by the lack of purely destructive items.
I suspect that another factor is that a lot of the stuff we are seeing is not new, but is a variant on an existing malware. I would expect generic detection to be reasonably effective against those, and that larger users would have that in place and up to date?