Facebook Privacy
Preserving your privacy on social networks may seem silly when we're sharing so much online. I don't think it's necessary to share all of your business when you are trying to stay in touch with friends and family members all around the country or around the world. Here are some of my recommendations for using Facebook without letting everyone in on your personal business.
Facebook Terms of Service
Download the current Facebook Terms of Service which says you own all of the content and information you post on Facebook. It currently says, "You own all of the content and information you post on Facebook, and you can control how we share your content through your privacy and application settings." This is a remarkable improvement in security compared to the Terms of Service released in February 2009 which said "You hereby grant Facebook an irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license (with the right to sublicense) to (a) use, copy, publish, stream, store, retain, publicly perform or display, transmit, scan, reformat, modify, edit, frame, translate, excerpt, adapt, create derivative works and distribute (through multiple tiers), any User Content you (i) Post..."
Facebook Site Governance's Notes
Covers a nonbinding statement of principles: freedom to share and connect, ownership and control of information, free flow of information, fundamental equality, social value, open platforms and standards, fundamental service, common welfare, transparent process, and one world. I was particulary interested in "one world" which means that Facebook should transcend geographic and national boundaries and be available to everyone in the world.
Cancel Applications that Snoop in Your Data
Many Facebook applications do not respect your privacy because they save your data for more than 24 hours. Facebook requires this but doesn't check out the applications to make sure the applications follow the rules. I resist the urge to install most Facebook applications. To see the applications you have currently authorized, go to Settings > Application Settings. Then choose Authorized from the "Show" drop-down menu.
Watch Your Friends' Applications
If a friend on Facebook installs an application by default the application will be able to see 
anything you have shared with that friend. To restrict the data available to applications your friends install, go to Settings > Privacy Settings and click on the "Applications" link. Then click on the "Settings" tab. Make changes and then click "Save Changes".
Control What People Can See
You can create categories of friends such as personal, or business and limit the content you share to certain lists. To create a list click on "Friends" and under "lists" click "create". To restrict sharing, go to Settings > Privacy Settings and click on the "Profile" 
link. Open a profile items drop-down menu and choose customize. Select some friends in the pop-up menu and then enter the name of the friend you want to choose.
For more information check out the Unofficial Facebook Resource