Webhosting does not break a law.
Webhosting allows users to post data, which can be retrieved.
Yahoo Answers is a web host for the same thing. Data is posted by users which can be retrieved.
Should yahoo be shut down if someone posts lyrics to a song which violate copyright law?
Should yahoo be shut down because some people use avatars which are made from copyrighted images?
Its the same thing......
Data storage is essential to the internet, rapidshare and any other of the thousand similar sites are part of what make the internet great.
Remember, all data hosts can be contacted and asked to look at data which has been posted, if it does violate a copyright law, it will be removed.