Honestly, I think most people just don't care as much about privacy as you and I. I have many friends who are perfectly aware of all of the security and privacy concerns re Facebook, and continue to use it because they just don't care. Or at least, the value they derive is worth far more than how much they care about privacy.

It's easy to slip into the mindset of "if only I could enlighten these unwashed masses, they'd see how right I am!" I think the bottom line is that sometimes people just have different values.