At the end of the day you give the passenger a "warning letter" and take their name and address which usually puts the woolies up some people. Taking people to court is a costly and lengthy experience so no wonder airlines don't bother too often.
I have seen on Malev hosties taking phones out of people's hands and confiscating them for the duration of the flight.... but this just leads to major agro and abuse from the customer. I guess you have to judge it on the spot - most customers if harrased enough will keep those blooming things switched off eventually.