Kookaburra sits in the Old Gum Tree...I'm playing with fire here; the Kookaburra song is still copyrighted. I'm pretty sure quoting the first line for non-commercial purposes would qualify as "Fair Use", but I woulda thunk that using it in a pop song was Fair Use, too.
Apparently, no. "Men At Work" are being sued, 28 years after putting half the Kookaburra song (just the tune, not the words) in the "Down Under" song. You know, the one with the line "She just smiled and gave me a vegemite sandwich."
(Vegemite® is a registered trademark of the Kraft Foods Corporation. All Rights Reserved.)
Anyway, the idea behind copyright is to encourage people to create stuff by giving them a monopoly on the right to that stuff. Copyright used to last 14 years, plus another 14 years if the creator was still alive and bothered to register an extension.
I think we'd be better off with that old law. Men At Work wouldn't be sued for using the Kookaburra song (which was written in 1934, so the copyright would've been long expired). In fact, the Down Under song would be in the public domain and a whole new generation of pop stars would be free to rework it to create something new.
I suppose the danger is that if everything created before 1981 was in the public domain we'd buy less new stuff and get more old music (or movies or books...) for free. But I don't think that would happen. I think we would get more old stuff, but we'd also spend exactly as much money as we do now on new stuff. And pop stars would end up a little bit richer, because they wouldn't have to quite as much money defending themselves from ridiculous copyright lawsuits.