An intriguing question. And one to which we've had no shortage of answers.
The 'police state' argument was put most forcefully by Tony Benn on Channel 4 News on Friday night. Andrew Rawnsley in the Observer today rejected Benn's notion that "Britain has become a police state" because in a real police state (like Zimabawe) he apparently wouldn't have been able to make that accusation without being arrested. That's debatable - the police don't always operate in such an obvious manner as that - but in any case it's a distortion of what Tony Benn was saying, which is that police arresting and searching the offices of an opposition front bench spokesperson is something that tends to happen in a police state. And Tony is right on that front... but I think the main issue here is more complex than the accusations and denials of 'police state Britain' suggest.
As I understand it, Damian Green was arrested due to suspicions that he was revealing leaked material which compromised national security. (The precise charge was some kind of arcane 18th century legislation regarding "suspicion of conspiring to commit misconduct in a public office and aiding and abetting, counselling or procuring misconduct in a public office" but that surely must be a front for something deeper - if it isn't then the arrest really is a complete farce and the police deserve ridicule.)
"National security" is a vague term at best, but let's suppose Green was breaching the Official Secrets Act by revealing classified information. If that's the case then the police were acting correctly in arresting him. Parliamentary privilege, the special dispensation which offers immunity from slander, does not offer immunity from prosecution for breaches of the Official Secrets Act. Otherwise the Act would be meaningless as anyone who wanted to reveal a secret could just ask their MP to do it in the House of Commons and, as Hansard is a publicly available record, the official secret would no longer be secret.
If Green was not breaching the Official Secrets Act then it's unclear what offence he committed - or indeed why he was arrested. Leaking non-classified information is not an offence, and neither is embarrassing the government (fortunately).
If Green was breaching the OSA, it's not the police that are at fault (although the manner of Green's arrest was ludicrously over-the-top) - but, rather, the draconian nature of the OSA itself. This reactionary and outdated Act - which affects MPs as much as anybody else - is a bigger threat to the operation of democracy in the UK than any over-zealous police chief. And that, I think, is the issue which opponents of Green's arrest on all sides of Parliament would be best focusing their attention on.