A study has shown that it does indeed increase productivity ( as long as it is done in moderation, obviously). Check this out: http://arstechnica.com/web/news/2009/04/study-surfing-the-internet-at-work-boosts-productivity.ars
I do it myself but I usually make it work related 'surfing'. I search for articles in my field, but never use chat or facebook or similar types of social sites. I do however keep in touch with my beloved partner by email. All these help me in maintaining concentration and interest in my work ( which is intrinsically interesting but we all need to open a few windows and doors during the day to let a bit of air in ).
