Blasphemy laws should be repealed (most have).
However, there is a need for religious vilification laws, and the approach should be one of balance.
If you think that acting in a hateful way towards someone because of their gender, sexuality or race is wrong, there is strong reason to support religious vilification laws. As a society it is not a good thing for people to be inciting violence and hatred.
Our Constitution provides for freedom of religion, and rightfully so. Part of this freedom, in my opinion, extends to being able to freely practice one's religion without the threat of violence or severely hateful behaviour. This has to be balanced with existing laws of the nation however. A religion that says it is okay to kill people cannot obviously afford the same level of protection.
Of course, free speech is also important. Criticising a religion is not the same as vilifying it. Reasonably attacking or expressing an opinion about the merits of a religion is not vilifying it. As Generator mentioned, there can sometimes be a fine line. I think the approach should be one of balance, but one that is very liberal and lenient towards discourse about religion. However, when you reach a high enough threshold to be actually inciting violence -- that's where the law needs to step in.
With regards to the people charged and saying that the Koran promotes violence and terrorism, I think evidence needs to be examined as to whether it was a reasonable opinion. If it was an opinion roughly based on facts then I think a very liberal interpretation should be given to exonerate the critics.
While I myself am very antagonistic towards almost all religious institutions, and I don't believe that society should prevent people from having critical discussions of religion, we do want to give enough freedom to people practicing religion to do so in safety and as much peace as is feasible.