I think you're giving the government (just think about that for a moment - this government, the one with TB in charge, GB and good old JP - this government that seems to have problems even with celebrations in breweries) rather too much credit.
I think you're also overestimating the capabilities of current technology. Googling some data from BT and doing a quick bit of maths indicates that on BT alone, even if the conversations were short and spread equally throughout 24 hours, there would be slightly over 200,000 concurrent conversations. And they are all monitored, are they? And then all the other networks on top of that? And then all the emails? And instant messaging as well, I suppose?
Unfortunately it all rather falls down if, as was reported in the papers a few days ago, you just use simple word substitution.
If the war in Iraq was as well organised and financed as this surveillance, it would have been over long ago.