The New York Times has a story on Facebook's new social advertising feature, suggesting there might be privacy implications. While I will need to learn more about specifically how the function works (and how easy it is to opt out), at this point it doesn't seem particularly problematic - assuming individuals have the right to control what information is displayed.
What I am concerned about is the user experience. My research and those of others (e.g. danah on Friending) suggests that there is a wide spectrum of relationships that are included in the typical users list of (SNS) Friends. Do users really wish to learn that someone they met once at a party two years ago and never spoke to again bought a copy of the new Harry Potter? Of course, it depends on how intrusive the information is when presented to the user -- it could be seen as a useful service (the way that some users view the News Feed).
But I do think we'll see more episodes of "facebook survivor" once this feature goes live - people cleaning out their Friends lists so as to cut down on the page clutter. There could be a real benefit to being exposed to new ideas or cultural products being consumed by people who are slightly different from oneself. The whole notion of "bridging social capital" is predicated on this. My sense is that there is a sweet spot - people who are not too different from yourself, but just different enough. If the site allows individuals to tweak their preferences so that they can essentially turn ads into useful recommendations, this could be a huge success for Facebook. But I think it's dangerous to assume that any action by a Facebook "friend" is implicitly a recommendation. The process is more complex that that.