Time to put my 2 cents in here: I'll be speaking as a Muslim, as an Egyptian (we're basically neighbors with Saudi Arabia) and as a person who has actually visited Saudi Arabia and spent about 4 months in there:
As for the situation in hand, there is a bit of over reacting on the police and authorities side. I mean, if someone is dancing in the streets, just let him do his thing, he's not ACTUALLY doing something bad there, I mean.
As for the Saudi Arabian laws in general, no offense to any Saudi Arabian person, but I do believe the laws there are pretty harsh. This is something that my family has experienced 1st hand there. When we went to Saudi Arabia, we stayed in a city where it was obligatory for women to wear Niqab (a type of clothes that basically covers all the woman's body except her eyes) whenever they're in the street. Everytime we had to go out, it would take time for my mother and sisters to wear it, and then they would be very hot whenever in the streets to the extent that they no longer wanted to go out and stayed home all the time.
In my opinion, people should be more free as to what they can wear. My mother and sisters have chosen to wear Hijab (another type of islamic cloth that covers the hair only, it is a degree less than Niqab) by themselves. They don't want to wear Niqab so that's their choice. I'm not saying that women should wear clothes that make them half naked like some women do, but still,I believe that things shouldn't be restricted that much. Religion should be taught by love and calmness, not by force. I believe that using force will make things become worse, it creates suppressed people that become like a bomb, waiting for any chance to explode, this is why when some people from strict countries travel to other, less strict, countries, they just do bizarre things you'd never think they would, when it's just because they experience freedom for the first time in their lives.
From a religious point of view, though, Saudi Arabia is and will always be a country that I love whatever happens. This is because it contains the two most important islamic places: Mecca, where Hijj, an important islamic duty is performed, and Madina, where Prophet Muhammad (PBUH) is buried. I gladly appreciate how the Saudian government takes intensive and particular care of these two cities. I was there, and it was astonishing how amazing these 2 cities were.
One last thing I want to add, commenting on King Cobra's post: I just want to correct a bit of information that a lot of people believe; not all islamic countries are as strict as Saudi Arabia. In fact, most islamic countries don't even come close to Saudi Arabia in terms of strict laws. I don't know details about all the laws in the neighbouring countries, so I'll just talk about Egyptian laws:
As for law and religion, the Egyptian law has many parts BASED on islamic laws, but not every part of law is based on religion. For example, marriage, divorce, legacy and familial matters are dealt with according to the person's religion, islamic or christian (They are quite a lot of christians in Egypt). Some other matters have their own built laws. For example, the punishment of robbery is going to prison not cutting hands.
As for women, women have much more rights nowadays in Egypt than they had about 50 years ago. There are many jobs that women do, some of them are doctors, engineers, pilots, even judges, police officers. Also, ministers. But to be sincere, I have to point out that in most of these jobs that i just mentioned, women take less exhausting jobs than men. I won't deny that there is still some preference for men over women, but I believe that over time, this preference will fade away gradually as women prove themselves to be worthy more and more.
As for gay people, yes, I'll admit they are very badly treated. I personally believe that the problem is in the "gay act" itself not in the "gay people", but that is a whole topic by itself that I may discuss elsewhere, as this post is very long by itself already.
So sorry if this was too long and sorry if it was too religious. I just wanted to express my full thoughts on the matter.