Unless you're like the Unibomber and live in a remote cabin, you're probably already bored of the security and privacy news surrounding Facebook.
Since Facebook has realized that they're precariously close to losing millions of users over the bad press, they've made some changes to the privacy settings in an attempt to simplify them and rebuild the trust that has been lost.
What It's Really About
But it's not about settings. I appreciated their efforts to make the settings more granular some time ago. As I see it, there are actually two major hurdles for Facebook, neither related to the current set of privacy settings but to their lack of respect for users and their data:
2) In addition, there is currently no easy way to close an account. You can only "deactivate" it--meaning that all of your data is still in Facebook's servers, linked to other users' accounts and ready for your inevitable (ahem) return to their social network, at which time your account can be conveniently reactivated.
These are the ways that Facebook has betrayed the trust of its users. It's not about what settings can be configured. Facebook just needs to show some respect for the users and data that have made the social network successful.
Why Your Data Isn't Safe
Recently, Mark Zuckerburg had a phone call for the press where he explained Facebook's mistakes, its goals, and the changes that are being made. The way I see it, there are only two possibilities here:
1) Mark Zuckerberg is a liar. He doesn't want to really change the way Facebook does things because this will result in a loss of revenue. The revamped user settings are just a red herring.
2) Mark Zuckerberg is a bothersome, idealist figurehead to those who actually run Facebook and must appease him. He may not have made these business decisions for the sake of revenue, but those responsible for increasing revenue convinced him that these offending choices were best for other reasons, e.g., that openness is the way of the future and a way for Facebook to continue changing the world. This would also suggest that Zuckerburg's lofty goals and hubris will be his downfall, like so many ancient Greek protagonists.
Regardless of Zuckerburg's motives, your data is not safe with Facebook.
How to Demonstrate Respect
To turn this situation around, they need to demonstrate an unflagging respect for their users' personal data, even at the loss of revenue. This means not unnecessarily sharing data and not changing the way data is shared, even when settings are added or removed. This will take time. They will not be able to gain their users' trust as quickly as they lost it.
They also need to provide a way to completely close an account without any caveats or persistent data. This would be a huge overhaul; it would require removing photos, updates, comments on other users' walls and posts. It would also require removing other users' actions relating to the cancelling user's account. This is a huge loss of data, but it is the only way to thoroughly remove an account from the system.
Even if someone never cancels his account, he can take comfort in the fact that if, at any time, he is uncomfortable with Facebook's use of his data, it can be quickly and thoroughly wiped. This would not only decrease users' reluctance to share personal data on the site, it would also give the users an effective way to hold Facebook accountable for its decisions, as any bad decision could result in a permanent loss of valuable data.