Also, let's keep in mind that for every site that went down, another site went up
You are right bit it doesn't have to be a 1:1 ratio. It could even be that for every 10 sites that went down, one site gained. Sites like wikipedia, amazon and cnet were model sites for Panda (the guideline doc. uses them as examples) and those kind of sites might have gained at the expense of 100s of sites.
But whether Google needs to be regulated, is it realist to expect them t be regulated and if yes, who will do it is a big question by itself.
Incredibill says that if popular sites like facebook, twitter and the likes combine together, they could succeed to an extent in making Google to pause and think. But Google is making popular sites or brands as examples. So these popular brands might not choose to group together unless they have something else in mind.
Someone else here suggests that we webmasters combine together to have our say with google. A few others say that U.S. or Europe or the respective countries should support its people by regulating Google.
There is another interesting example which i felt like quoting here - It looks like sites in Pakistan are having an issue with adsense eCPM and a google employee from Pakistan has replied back to them on FB saying that he will look into it and do whatever is possible from his side by reporting it internally. It is an interesting thread where people even suggest politics as a cause of it.
But all these expectations of regulating Google might or might not be realistic and we wouldn't even know the timeframe, if it were to happen. The best choice as some people here pointed out is to do what you can do from your end and not to promote or credit the likes of Google for everything as it isn't going to help you but them.
Google has a clever business model where they are supposed to be giving away "free tools". Bit it isn't the case as there isn't anything free. It is "free" only when something is given to you without any expectation of benefit from their end. People need to think twice whenever something is offered to them as "free". Be it "free tools" or "free software". These kind of providers are very clever people (you might even call them evil if extreme cleverness is what evil is supposed to be) as they mask their benefit from the receiver and double benefit through popularity.