I just finished a radio interview with NPR's 'Talk of the Nation' on this topic in response to a recent L.A. Times op-ed on the issue of 'Teachers under the morality microscope'. A law professor, Jonathan Turley, wrote that teachers shouldn't be disciplined for 'legal' behavior that is posted online (drinking alcohol, bridal showers at a strip club, posting rants about their students or same-sex marraige).
I had a slightly different take on the issue that I posted on my Psychology Today blog: Hate Speech: Is a Higher Standard Fair for Teachers? Teachers need to have media literacy skills and be able to model and teach about 21st century skills so students understand the reach and impact of their online lives. They need to understand the impacts of their public behavior on the climate of their classroom. There are some limits to teacher expression, but I don't think having the right to post a picture of yourself drinking wine is the type of expression we should be worried most about.
The podcast of the 20 minute discussion is available at the Talk of the Nation website.