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Like Giom says, people would do other stuff (smoke, IM, chat at the water cooler, check ESPN).
And I don't think it hurts productivity to let people take a break and then resume work.
And is it even a waste? It might cost employers, but it also increases social capital; the world may be better off in ways GDP doesn't immediately reflect.
Check our Mashable's post for a good analysis of why it is a wretched study:
http://mashable.com/2007/08/20/facebook-product...
And of course I have to shamelessly plug my own post:
http://andrewcafourek.com/2007/08/20/fight-the-...