Melbourne Tigers had it perfect on the weekend. This shouldn't even be a debate anymore, all the other clubs need to be told to follow the Tigers' model.
For those that missed the game, things were kept pretty quiet during play but the 1-2 songs each quarter they did play all got the crowd MORE involved rather than silencing them. From watching on TV it seemed lyrics were banned (someone at the game might be able to confirm that). The other thing they did was use some of those sound effects you here at NBA games that get people to clap, which seemed to work well.
Basically, when the game was on, the basketball was the only thing vying for the viewer/spectator's attention. Which is how it should be.