To Spy or Not

So we have the U.S. government admitting to spying on U.S. citizens' telephone conversions. Is this good or bad? They're saying they only monitor incoming and outgoing calls to suspected terrorists in other countries. On one hand you can say 'hey, these are serious personal privacy rights they are trampling without even getting a court order. No American's rights should be ignored and should be protected.'

On the other hand if you've got nothing to hide, you may say 'let them watch me, I'm not hiding anything since I'm doing no wrong' which would openly let them investigate. If they opened the flood gates on spying on everyone, would it be a good thing in a way since they could find the culprits who plan to harm the U.S. and quickly catch them? If you've got nothing to hide, who cares if they listen. If you don't know they're listening and you live in the illusion of privacy, then who cares, right?

I'm not sure which argument is stronger. If they could spy based on credible intelligence and prevent another big terrorist attack here or elsewhere, I think that would be cool.