Facebook just instituted a new privacy settings regime. As expected, there's ruckus. The EFF's got the full dope, and yes, I do recommend stopping for a sec to read that, as it's remarkably thorough and reasonably noise-free. The takeaway is that a, the "Recommended" settings are bullshit; b, there's a troubling trend here of selling out users in small, hard to notice ways and then weaseling about it; and c, new ground gets broken daily in terms of doing interesting and freaky things with sorts of data that we may not even be used to thinking of as "personal information."
Frankly, I have no idea whether there's any commonsense advice that's worth a damn re: number 'c.' That's some society-wide shit right there, and it's only gonna get weirder—welcome to the future, hope you took your dramamine. About a and b, though, I do have something I want to get off my chest.
For the last year or so, I have considered anything that happens on Facebook to be part of the public internet: visible to anyone, linkable from anywhere, searchable to any depth. I strongly recommend that you do the same. The current situation stops well short of that. There is absolutely no reason to believe the current situation will hold.
I've been on Facebook since somewhere around January aught-five. In that time, it has mutated drastically, turning into an entirely new beast at least three times. What I joined was a simple and elegant pictorial phonebook for my college that occasionally invited me to parties; subsequently, I found myself subscribed to a lightweight social blogging and photo platform, an alumni finder/24-7 high school reunion, a more-irritating-than-usual casual gaming site, and a cross-medium content aggregator and identity service. And every goddamn time it's changed form, I've been bitten in the ass by some habit or policy I adopted to suit some earlier incarnation.
Point being that however good or bad the current privacy regime is, god only knows what this thing'll turn into next. I don't think I consider Facebook evil, but it is a changeling, and changelings are not to be trusted.