OVERSIGHT,
You are right in saying neither Napster or Gnutella are technically illegal, but you are wrong to assume that it is legal to trade copyrighted material. Both Napster and Gnutella ARE LEGAL. They are simply file sharing programs (or the medium) to which millions or people illegally copy copyrighted materials. To say that Napster is illegal is to say that cassette tapes are illegal. People used to make copys of tapes/CD's onto tapes for their friends and that's all Napster is. It is the individuals using Napster that are committing the crime, not Napster.
Notice how Napster doesn't mention sharing all music anywhere on the website. They promote new bands wanting exposure and featured artists, because they can't officially condone what goes on.
The IS something wrong with these programs and something will have to be done in the law to prevent programs like this. Gnutella is nice cause it evades the law. As someone else said, there is no central part to attack, just the users!