We used to have MasterEye running in our first year CS Lab at Uni - made the Powerpoint lecture notes appear on your screen so you couldn't idly surf etc during lectures...
It broke. So people were on Facebook, MSN, eBay etc. during lectures. They tried again and again to fix it, it just didn't grab every machine in the room for some reason.
I think they gave up and are implementing something else.
my University has NO actual web filtering whatsoever, but you get monitored - a friend of a friend decided to test it... and could eventually only access one page telling him to arrange a meeting with IT Services to discuss his use of the net. He was put under probation for ages.
We're port filtered to buggery, though - at least within the residence network - go to a hall's computer room, and more ports are open, and go to the CS Lab and ALL the ports are open. Not only that, they've got a signup system so you can register your MAC and use their systems, so I can play the odd game or two when "working" of an evening!