I don't know why Blair changed the licensing laws so that pubs could open practically all day and night (or why he encouraged the opening of super casinos). I don't think increased licensing hours are the core problem, but it certainly can't help.
It's common to see drunk and argumentative people in UK town and city centres late at night and it seems to be particularly a problem in the UK. Jess I agree with you - I've often heard DJs on the radio joking about getting hammered, as if it's "cool" or some sort of badge of honour and I wonder if the rest of Europe has this sort of jokey attitude to people getting so drunk that they don't know what they're doing.
I don't feel that raising the price of drink will stop habitual drinkers (some of whom, as gillybob suggested, may have started drinking to blot out problems). As several have said, cigarettes cost a fortune now but I, and many others, still buy them (yes, I know, it's stupid), but as Movedalot says, if cigarettes had been enormously expensive when I was young I may not have developed the habit in the first place.
Anyway, whatever anyone thinks, it looks like Cameron has backed down yet again. It's said the reason for this is because he'll alienate a lot of voters but I think it's more likely he's been warned that big business takes a very dim view of his plan.