Well, blocking cookies entirely can cause many sites the parents need
(such as banking sites) to stop working properly. You may want to find
a way to block cookies for specific sites.

As to looking at a kid's myspace page to see if there's any info a
sexual predator can use - the media's over hyped it. Sexual predators
really are not that terribly prevalent on myspace (I think someone found
that they made up something like one onehundreth or one onethousanth of
a percent of the people on myspace, going by the reported incidents).
Also, I've never heard of a sexual predator coming to a kid's house
without the kid asking them first (so whether or not the info is on the
kid's myspace page is a moot point - if they're asking the guy to come,
they'll give it away anyways). And most of what kids do on the web,
from what I've seen, is pointless conversation (you'll never believe how
many times I've seen someone send an e-mail saying they'll call someone
else after school).

As for tracking what your kid is doing on the web - get them to use an
e-mail app so you can see their sent messages, and use a program like
Gaim where their IM convos are logged. The majority of what's going to
be said that kids don't want you to see is probably not going to be put
on a public web page. Also, freaking out simply because the kid has
what state/city they're in and their age is overreacting, in my opinion
- there's very little someone can do with that (unless you happen to
have the only 16 year old in Chicago, or something like that). Now,
their full name should not be on the page - this is not only for sexual
predators, but identity theft can be a concern as well, and the kid
should get in the practice of making sure no information that could lead
to it is posted.

Also, on the topic of identity theft, that is one reason why someone may
hack into your computer. If they can break in within fifteen minutes
and get all the info to your credit cards and your bank accounts, then
they've made a profit. While I haven't heard of this happening, I
really do not think it is outside the realm of possibility.