#1, think of all the paper being wasted and used. It's 2011. The last time I used a phone book, an Arkansan was in the White House. While I don't necessarily agree with a monetary fine, I find it very wasteful, and it's akin to littering.
Will these lists really be heeded? You think the folks who deliver the phone books will really consult a list of addresses? It's a pain in the butt lowly job being done by people who might have no other job prospects for the time being.