I definitely think something needs to be done. Transponders/TCAS1 (VFR only as I understand it), full blown TCAS2 or FLARM..... there needs to be something to aid the mk1 eyeball. Fitting a fully certified IFR system for Private flying would be prohibitively expensive and would need some form of pilot training. FLARM would be ok if it is as great as it is made out (at what stage would the system become saturated?). TCAS1 is not terribly accurate and requires a visual contact before being able to manouevre to avoid.
But the big issue here is the military. They have been invovled in a significant number of mid airs with civvy machines, but they will never fit FLARM and if they do have mode S they often don't seem to use it. And if they do have fancy target tracking radar, they don't use it for avoiding other aircraft.