An age-old debate; Separation of Church & State

It's pretty obvious our country has changed quite a bit in almost every way in the last hundred years. The least of that change certainly has not been in the debate on church vs. state. I have often heard people refer to our nation as a godless one and use the removal of prayer in schools as their biggest argument. I DO believe we have fallen short of some of God's best plans for us as a nation, but I do not believe that this is one of our more serious issues. Many Christians would disagree with me, but I believe the loss of prayer in schools is not the worst thing that has ever happened to this nation. Let's take an example from history on this one. Constantine, the Roman Emperor who converted to the Christian faith after seeing a vision in the sky during battle, paints an early picture of the separation of church and state (church and empire I guess). When he converted he made Christianity the national religion of the Empire and what happened- it declined. It got crusty and turned into motions in spite of, or maybe becuase, the fact that faith merged with government. Don't get me wrong, I'm not saying government and religion are warring; all I'm saying is that God is in control. Three of the gospels record the story of Jesus saying "Give to Caesar what is Caesar's, and to God what is God's" in response to a question about whether money should be given to the church or for taxes. Jesus seems to be more than okay with some separation here. God is bigger than governments and people, even when governements make laws that seem to opposed to God. His will cannot be thwarted by us, we can't screw it up. Maybe when government seems to be far from God and injustice is clearly seen we have a look at the deepness of our sin and our need for more reliance on God. I hope you don't see that as a trite little answer for my view on this. I'm not discounting injustice, sins of the nations, and all the people that are hurting because of corruption- but God is still in control and He deeply cares about each person in each nation of this world. I welcome your comments on this.