I sit there and watch them just as the wife does. We limit their time on the computer, anywhere from a half hour a day to an hour a day.
My kids are 13, 9, and 8 and only allow them to go to kid friendly sites like Disneychannel.com, Hannah Montana.com. funbrain.com etc... We don't allow them into places like Myspace, Facebook, yahoo chat or anything.
Plus we have the computer in the living room where everyone is.
If they are on a computer that is not in a populated room like their bedroom, you have to make unannounced periodic times and see what they are doing.
Check the History of the computer often and talk with your children about the dangers of online predators. Sit down with them and watch one of those Dateline predator shows or show them news articles online about people posing as children to talk with other children and then those kids winding up dead or seriously injured.
If you find that you cannot trust them online because they are going where they are not supposed to when you are not home or whatever, then ban them from the computer at home until an adult is home or start sitting with them for awhile when they are online.
I am not sure how to do it but I believe that Facebook and Myspace can be blocked from access.
Obviously you wont be able to watch them if they are on computers at school, the Public Library or a friend's house but that is why you need to hammer home about the dangers of online predators.
Be a watchful and vigilant parent so your children know that you will be popping over their shoulder every once in awhile and when you do, look at the bottom of the screen to see if something has been minimized. Make it normal again and see where they are or who they are talking to.