I do not see a problem with it - I think you would be paranoid to think that the Govenment is going to have the resources to track the movements of people who are not already on the police watch list, and if you are on the police watch list, you are doing something wrong. So stop it.
The thing in Iceland as well, thats interesting, but I bet the only people who have something to fear is those people who are into serious and organised crime, they are not going to tap phones, set up cameras and watch internet action on random people, they are going to do it on people they want to convict of something. It would be a massive waste of resources to bother with anything smaller.