I agree with most of the points from Gulliver, just like MikeF and JMM. Control is a key point to settle your position. But not THE key.
Counterinsurgency theory is based on the fact you are ruling a place and then you become or stay more attractive by your capacity to deliver social services and protection. The challenge on uncontrolled areas is to reinstall the legitimacy and the legacy of loyalist power. This is costly, extremely costly. Why? Because you have to conduct at the same time shock or hold operations and convince the people that you are the legitimate power.
In somehow, in red areas, you are the insurgent (with a lot more means, manpower and money). The battle you are conducting is the propaganda phase from Mao insurgency three phases, the very first one step.
In such approach, you need to put more efforts and money into red areas. But, in the same time, and this is costly, you have to strength and settle your position in green areas.
Loosing the red areas may look more interesting in a short term. But after, you put your self into a defense strategy. This never works. The best defense being attack, you have to challenge the insurgents in red areas. They protect people then you have to demonstrate to the people that they are not protected. You cannot kill them but you can disrupt their economy, the distribution of justice…

Justice, as it is mentioned in the first quote from MikeF, is one of the most important issue to be addressed. Justice does not have to be the tool to distribute terror but to convince population that under your power, justice is protecting them.
In green areas, distributing justice and fighting corruption should have been the objective since the first day.

As a senior planning adviser in Iraq, I lived with that book and it's realizations, and tried to re-direct US efforts to helping Iraqis to fix what was broken, rather than any stupid US programs and projects. Obviously, in 2007, I was too late to stop much of the Sorcerer's Apprentice buckets of cash wasted, but did what I could.
As humanitarian coordinator, I can just agree with Steve. And not just about social services. Bad implementation of any kind of aid based on administrative career is may be the most counter productive thing that we have been able to come with in conflict areas.