People really should take a look at Europe vs. Facebook - and especially some of the videos on their Youtube channel. The site was created by Max Schrems, a 24 year old Austrian law student, who has been examining Facebook's data collection practices and contrasting them with European data protection and privacy laws - he believes Facebook is breaking the law.
Whether that is true or not, it is pretty frightening how much data the company collects about its users.
Max filed an information request to the company, and thanks to European law the company was required to respond - they sent him a CD containing what they claimed was all the data they had collected about him: 1200 pages worth of data. When he started going through the contents of the CD, two things stood out: the massive 1200 page dump is actually incomplete and Facebook never deletes anything, even if users ask them to. Scary stuff.
Max is doing a pretty good job getting the media interested and raising awareness of these issues. I wish him the best of luck - but I'm afraid that until the free alternatives get better, people will just keep handing their personal information to Facebook and things will keep getting worse.