Whitfield Diffie and Susan Landau have an article on ACMqueue that reviews developments in wiretapping technology and the privacy and security risks that such changes have created. Some quotes from their article:
Curiously, the greatest threat to privacy may not be snooping on people but snooping on things. We are moving from a world with a billion people connected to the Internet to one in which 10 or 100 times that many devices will be connected as well. These range from the much-discussed smart refrigerator that knows when it is time to order more milk to RFID (radio-frequency identification) tags in products that enable the tracking of where the goods are located before, and perhaps after, retail sale. Particularly in aggregation, the information reported by these devices will blanket the world with a network whose gaze is difficult to evade. The future of privacy will depend on a combination of legal and technical measures by which device-to-device communications are protected.
Building wiretapping capabilities into communications infrastructures creates serious new risks. The complexity that wiretapping introduces led the IETF (Internet Engineering Task Force) to conclude that it should not “consider requirements for wiretapping as part of the process for creating and maintaining IETF standards” (RFC 2804).
The surveillance we are attempting to build may increase security in some ways, but it also creates serious risks in a network infrastructure that supports all of society. Given the importance of the Internet to society—and given the importance the network has in communications between people and their friends, governments and their citizens, businesses and their customers, and in all of society—communications security is critical, and that should take precedence in the debate over communications security versus communications surveillance.
You can read the entire article here (pdf).