PeerGuardian is a nice bit of software that hide a lot of of information that can be used to identify. FYI, the problem with torrents, unlike server based P2Ps like Kaaza is that on torrent your IP etc can be viewed by anyone. PeerGurdian mitigate this risk.
Though it's understandably not full proof and won't be able to save Sys Ops and Hosts etc if a competent organization is going after them. The way to deal with this kind hunt is to use server/programming techniques (i don't know about them but heard some bits and pieces) involving obfuscation, filtering and firewalls.
As far as Indian users are concerned, neither Cyber Law enforcement and nor Copyright scene is too good and clear here. Though things are improving, or rather say worsening for pirates.
Also because some people have discussed Static and Dynamic IP let me tell you that according to law all ISPs in India are supposed to keep log for certain period of time. This log is supposed to contain all the data that has passed to and from the cables of the ISPs. Satic and Dynamic IPs doesn't matter. Your ISP always have the info about the kind of content you are accessing along with the exact time and date. To make matter worse, unlike western countries where people often need warrants before they reveal this data, in India often a call or letter from an ACP is sufficient. Privacy laws are oxymoron here
Ideally nobody goes after individual users because stakes are so low that it's not worth it. But if somebody is indeed monitoring you on torrents, PeerGuardian may provide you with a little bit of shroud. But for how long will it stay on you depends on resolve and skills of those who are monitoring you.
A greater problem than the risk of getting caught is torrent traffic throttling. There are ISP's which shape data and throttle traffic. Best way to deal with it, as somebody wrote on TorrentFreak, is to encrypt your data using inbuilt tools within almost all major torrent programs, nag CC/officials of ur ISPs and force them to give you an honest answer as according to law they are not supposed to throttle traffic, and raise as much hue and cry as possible and finally change your ISP. If everything fails your last option is to use
Tunneling but it costs a bit and is not really all that simple to use. But I doubt it will come this any soon