I went to a Parent Information Night at my daughters' school last night. The topic was technology and kids. Obviously, keeping our kids safe was a major theme.
The bottom line...get involved and get familiar. Know what they're doing...the sites they're visiting, the people they are talking to, familiarize yourself with sites they all know (MySpace, YouTube, TeenForums, online gaming sites, etc.), learn how to use parental controls, etc.
One of the more interesting sites we learned about is www.familywatchdog.us. Plug in your address and it gives you a list (and photos) of the convicted offenders in your area.
Does this mean these people will prey on your children -- no. But, you should be aware of potential predators who live where your children live, play and go to school.

