Well Dave to protect your business and reputation and to keep this from ever happening again, I think you should delete your myspace profile and cease doing business there. I mean if it is going to end up costing you Lawyer fees, there goes your profit, right?
On the other hand, I have shot over a hundred people I have met on myspace and they are free to post any and all photos from our shoot, I do not require they sign a model release, but they do have to be over 18.
They are still my photos and when girls I have shot had their photos used in Stuff (magazine) or on VH-1, guess what(?) they both knew they needed my permission before using them and had the girls NOT been able to post the photos, my work would not have been used...
Also, about a quarter of the people do repeat shoots with me, and half the people I shoot recommend someone, you think this girl you are in a pissing-match with is ever going to shoot with you again or ever recommend you for any photo gigs?
Of course you are free to have your own rules and views and if they work for you, it's fine with me, I'm just here to say there is another way at looking at this...
If God hadn't meant for them to be sheared,
he wouldn't have made them Sheep...