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To answer the question in the title (though not actually posed in the OP), I think it's clearly the government's responsibility to protect citizens against injuries caused by faulty products. One way that can happen is through damages recovered through the civil court. Product regulation is another way. The market just isn't successful at self-regulating this sort of thing.
Not to threadjack, but... I really wish my government would put the effort spent protecting me from terrorism into protecting me from foodborne illness or injury from faulty products. I'm VASTLY more likely to have my lungs burned by grout sealer than I am to be hurt by anything a terrorist might do.
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