I think overall it's a boon. Like others here, I have enjoyed reconnecting with people from my past. It's so easy for people to quickly share a picture or a thought, the stuff that everyday life is made of, and that you would otherwise miss.
Like every other technological marvel ever invented, the ultimate value of facebook lies in the hands of its users. There are a few people who use it in unpleasant ways, and that is just part of fb's technology growing pains. Because all things computerized change so quickly now, it takes a while for conventions and manners to develop and catch up and for people to catch on to what the rules are.
Privacy is certainly an issue worth being concerned about. I am very circumspect about what I post, and sometimes I will pull someone aside (in the real world or virtually by private message) and explain why I think they need to be more careful with what they put out there. It's so easy to post something and virtually impossible to take it back once it's on line; all anyone has to do is hit "save page as" and they've got what you posted captured forever. But protecting your reputation is something that everyone should be aware of whether they are posting on line or just talking while waiting in line in the grocery store.