As I heard someone say recently. "What happens in Vegas, stays on Facebook" - which is a very simple way of explaining the risks to people who may not normally think about how the photos and other information that they are sharing may come back to bite them one day.
Which leads me on to an interesting presentation that Julien Freudiger (http://twitter.com/jFreudiger/) posted a link to. Called "Towards Privacy-aware OpenSocial applications" it discusses what benefits might be realized from social networking applications being able to be much more aware of how sensitive information is and advise users when they are trying to do something that would decrease their overall privacy. The math in this presentation isn't for everyone - but the conclusions are interesting - particularly the comparison to FICO credit scores, which have gone from obscure to well known and actively managed by many people.
Wouldn't it be great if we had the same level of visibility over our privacy preferences? Hopefully if this kind of framework is supported by the big players in the space, it will just become part of the infrastructure that we don't have to think about.