My sister lives in Canada. No corporal punishment of ANY kind.. and yet she does the whole counting thing with her kids... 1, 2......... I've asked her what will happen if she ever gets to 3 an she just says that she's never got there so she doesn't know. Simply doesn't sound like a very sound strategy to me!!

The "1-2-3 Magic" program worked like a charm most of the time for me and my son! Its definitely worth investigating but you have to implement the whole program.
As for threats, I always followed through.
If my son stole money from me then he had to give me a game/ DVD or CD to take to Cash Converters or the like to get my money back. And we spent many a weekend "grounded" because him being grounded usually meant I was too. He had cancelled birthday parties and missed out on school social events because of various transgressions.
Empty threats are as good as the air they are spoken into.