Bruce Scheier has a great article in his latest Crypto-Gram Newsletter entitled What the Terrorists Want." His basic point is that the point of terrorism is to cause terror, and in this the terrorists have succeeded:
The point of terrorism is to cause terror, sometimes to further a political goal and sometimes out of sheer hatred. The people terrorists kill are not the targets; they are collateral damage. And blowing up planes, trains, markets, or buses is not the goal; those are just tactics. The real targets of terrorism are the rest of us: the billions of us who are not killed but are terrorized because of the killing. The real point of terrorism is not the act itself, but our reaction to the act.
And we're doing exactly what the terrorists want.
The entire article is well worth reading. Full link: