Check out the book Of Dice and Men by David Ewalt. He follows the history of DnD from its inception up to the playtest for DnD: Next (now published as 5th edition). According to his chronicle, the folks behind Dungeons and Dragons (which was at the nexus of the Panic) were initially taken aback and disturbed by the panic, but ultimately the increased publicity from the media circus expanded the audience massively and helped springboard the game into the mainstream.

As for what players did, I am unaware of any sort of survey done. Completely anecdotally, I know people who were active players during that time, but they've never said about anything they did differently, and I've never asked.