Where there is an adequate flow of information, and honesty and transparency from civil authorities, terror will be replaced by a combination of resilience and information. And it is now almost impossible to stop information flow - the trick is to keep it factual, unpanicked and free from rumour.
The spanish government fell, I feel, not because of a wish to placate the terrorists, but because they lied.
It's been quoted that "the bombers will always get through". That's still true, although that's not its original meaning. But bombing, of civilians in particular, has always been chronically ineffective as a weapon of policy. Much has been made of the 'Blitz Spirit' recently, but the same attitude was held in Berlin: "Unsere Mauern brechen, unsere Herzen nicht".
CBRN weapons up the stakes somewhat, but even they can be of only limited effect. I wouldn't advocate complacency - we all need to be observant - but we need to be equally wary of over-reaction - by governments as well as the populace. "War on Terror" is precisely the wrong way to do things - the best defence against terrorism is fair and equitable treatment of all people and of all nations.
ETA: interesting variation on Sky News, referring to the "War of Terror"