Labour have their own problems with all of this, in that some of the worst excesses happened when they were in charge. They could have done more, and it impossible to conclude anything other than that they were scared of pushing it any more - what it all serves to highlight is that for 2 decades, successive governments and MPs of every stripe have been like rabbits in the headlights, paralysed by fear over what the Murdoch press might do if they step out of line.
That having been said, it does seem really strange to me that Cameron took Coulson on as his Chief Press Officer - he keeps going on about "giving a chap a second chance", as if the government press office is some sort of charity - but this was bringing someone into the heart of government, giving them top clearance to access any and all info that came in. This, despite, apparently, warnings from Rusbridger, the editor at the Guardian, from Prescott at Labour , from Ashdown and from Clegg - All these warnings, some quite substantive, and Cameron still elects to take this on? Elements from within his own party also warned him but they were ignored too.
Given all this, what was he thinking? It points to a few unpalatable alternatives. Either those around him ignored the warnings, in which case he has shown poor judgement in picking his own team, or they did inform him, and he ignored them, appointing Coulson anyway, and that is either a desire to keep close to the Murdoch machine or really poor judgement.