As is often the case with government documents, the tone of the copyright section in the Digital Britain report reveals more than the substance. Given the collapse of the attempt to introduce a "three-strikes" law in France , it was unlikely that a similar approach would be suggested. What has been proposed amounts to carrying on with the law pretty much as it is and doing something else, unspecified at this point, if copyright infringement doesn't reduce within a year. In contrast to the relatively bland proposals, the language is in places emotive and weighted, such as:
The Government considers online piracy to be a serious offence. 
Aside from the fact that the use of the word "piracy" to describe copyright infringement comes across as puerile in a government publication, the sentiment appears to be at odds with the public mood. Copyright provokes a range of opinions; some view it as an illegitimate state granted privilege, some view it as an expedient state mediated bargain and some view it as a legitimate property right. However, outside of a relatively narrow set of lobbying groups, I know of few people who would consider copyright infringement to be a serious offence. In fact, I think you'd struggle to find many people who would consider it to be anything more than a relatively minor misdemeanour.
By pushing so heavily against the general mood, the government threatens to achieve the opposite of what it is aiming for. On a party political front, the success of the Pirate Party in Sweden shows what can happen when a government enacts draconian laws, even when the issue is one which is rarely at the forefront when it comes to election time. Outside electoral politics, the effect can be even more profound. It might be an unpleasant thought for authoritarian politicians, but it is customs and social norms which tend to define what is socially acceptable, rather than the force of law. In the long run, it tends to be custom which over-rides law, rather than the other way around. Legal brute force is a highly inefficient means of changing behaviour; it might be effective at guiding people in a slightly different direction to the one they're moving in, but if it's used to push the mass of people in a direction they don't wish to go, it will tend to break down.
In terms of copyright, a general disregard for the law is already in evidence. Under UK law, ripping a CD and putting it onto an MP3 player is prohibited, but I know of no-one who has any respect for that law. Of course, many will be unaware that the law exists, but even when people become aware of it, I've seen no evidence that their behaviour changes one iota. It's a clear example that even people who would ordinarily consider themselves "law-abiding" are prepared to ignore laws if they view them as outdated, pointless or stupid.
By describing online copyright infringement as a serious offence and retaining copyright laws that the general public clearly has no respect for, the government risks pushing copyright into the same category as the requirement that London Hackney Carriages must carry a bale of hay and a sack of oats or the requirement that all men in England must carry out longbow practice - laws which still sit on the statue books, but are regarded as amusing historical anomalies which don't need to be observed.
2. http://www.culture.gov.uk/images/publications/chpt4_digitalbritain-finalreport-jun09.pdf section 18.